just an excerpt that might help folks understand the ups & downs of how the pros play the game.
this tale is from the world of bonds, but the same manouvering applies to equities, especially (and perhaps moreso) with "dumb money" retail.
don't be a sheep.
:-)
GLTA,
R.
---
Dall was in the market to buy (borrow) fifty million dollars. He checked around and found the money market was 4 to 4.25 percent, which meant he could buy (borrow) at 4.25 percent or sell (lend) at 4 percent. The sellers were scared off by a large buyer. Dall bid 4.5.
The market moved again, to 4.5 to 4.75 percent. He raised his bid several more times with the same result, then went to Simon's office to tell him he couldn't buy the money.
All the sellers were running like chickens.
"Then you be the seller," said Simon.
So Dall became the seller, although he actually needed to buy.
He sold fifty million dollars at 5.5 percent.
He sold another fifty million dollars at 5 percent.
Then, as Simon had guessed, the market collapsed. Everyone wanted to sell. There were no buyers.
"Buy them back now," said Simon when the market reached 4 percent. So Dall not only got his fifty million dollars at 4 percent, but took a profit on the money he had sold at higher rates.
That was how a trader thought: he forgot whatever it was that he wanted to do for the moment and put his sights on the pulse of the market.
If the market felt fidgety, if people were scared or desperate, he herded them like sheep into a corner, then made them pay for their uncertainty.
