Reply to post: Re: Tool and trouble

It's IPO week and one of Wall Street's own is raising the spectre of a stock market crash

Lee D Silver badge

Re: Tool and trouble

Stock markets are based on "who's holding the hot potato".

People think they have anything to do with reality, and they don't need to have. You invest in something, it goes up in value (and the reason literally does not matter), you sell JUST BEFORE it crashes. You make an absolute fortune and yet may have had no idea whatsoever what Company X even sold, let alone did any kind of market analysis.

It's not about "owning stock", it's about making money. And you can make money by just riding the knife edge and having an intuition about when best to sell, or even waiting for the crash to START and then to start selling. You'll still make money if it was something like Tesla, for example, but you'll sell on the sudden 10% down-dip, rather than wait for it to hit zero.

It does not need to have anything to do with the stock, the product, what others are buying, the market state, global economy or anything else. It's just a graph to some people, and they buy when the graph is low, sell when the gradient changes against them rapidly.

Those kinds of traders literally don't care if Tesla goes bankrupt the day after. Unlike, say, people investing for pension funds, etc. They're just riding the rollercoaster of the graph, making a fortune, and spreading the risk. They probably just have automated sells in the system (which further contributes towards crashes, as has been proved in previous such panic-crashs).

So long as you're not left holding the hot potato, you'll profit.

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