Market buying and selling

[azanon]

I want to bring up a few things from today's discussion. Tom said:

Let's say that there are just 100 people who control the total market. They are the only ones doing the buying and selling, and let's say all 100 say they are currently bearish. Where do you think the market would go from there? Because they are all bearish, they are likely to have all of their money in cash or somewhere other than in stocks.

So, who is left to sell? No one. At worst, the market would stay where it is, that is until one of those 100 folks realizes that the market isn't going down anymore and perhaps he decides he'd rather take a shot at stocks again after being bored by the 4% or 5% his cash account made him.

Tom, for every buyer there is a seller. When you sell a stock at "market price", you aren't selling it back to the company. You're selling it to someone who's willing to pay the current "ask" price.

There are a finite amount of shares of a given stock owned by individuals at any given time, and this amount doesnt change day to day. It only changes when a company decides to sell more shares. For example, Microsoft company has exactly 9.57 billion shares owned by individuals/companies today. They will have 9.57 billion owned next week, and the week after that too.

So this idea of more or less people being in or out of the market is basically nonsense.

Once the last of our 100 investors decides he can no longer take the pain of missing the rally, we now have 100% of our investors calling themselves bullish. Now what happens? The market stops going up because there is no one left to buy. Now the market can start to move lower again.

That's why too many bears is bullish for stocks, and too many bulls is bearish. get it?

See answer above. What changes isn't the number of people in the market. The only change that occurs is what these people/companies are collectively willing to pay for the finite number of shares that are already distributed and sold.

When an IPO is issued, the total shares made available for sell, i presume are scarfed up before the first day ends. Again, the only thing that changes is the price of those shares. If they're deemed not valuable by the masses, the share price drops.

Yes, there are price splits and reverse splits, but these happen on a specific day and that day generally has no correlation with a bad or good day on the market.

 

[mlk_man]

What an idgit. So when I sell my mutual funds and go to cash, am I in the market or out? OUT!!!!!!!!!!!!!!!!

That is NOT nonsense...................

 

[azanon]

When you sell the shares in your mutual fund, someone else buys the stocks that composed those shares of those mutual funds from you.

Are there any other questions? I'll even answer the rude ones like the one above.

 

[mlk_man]

When you sell the shares in your mutual fund, someone else buys the stocks that composed those shares of those mutual funds from you.

Are there any other questions? I'll even answer the rude ones like the one above.

Not true. But you're really not worth the explanation.............

 

[Birchtree]

He can't help himself - the universe is grumpy. I should know.

 

[azanon]

Not true. But you're really not worth the explanation.............

Oh its definitely true you moron. You weren't worth the response; its was actually more for the benefit of others.

Milkman thinks when he sells shares of a stock, no one buys them. Does this guy really market time?

 

[azanon]

I have a neat idea; why doesn't someone discuss the topic I brought up instead of engaging in personal attacks. Should i just assume everything i said was correct, since no one has an actual rebuttal?

 

[mlk_man]

Oh its definitely true you moron. You weren't worth the response; its was actually more for the benefit of others.

Milkman thinks when he sells shares of a stock, no one buys them. Does this guy really market time?

Moron? LOL

So you're telling me, well everyone, that if I sell a mutual fund but no one wants to buy the stocks that are incorporated in that fund, then I can't sell it? Hmmmm, news to me. Plus, when I buy or sell a fund, I get the days closing NAV. If the market is closed, who's buying?

Putz...........................

 

[Wolverine]

I want to bring up a few things from today's discussion. Tom said:



Tom, for every buyer there is a seller. When you sell a stock at "market price", you aren't selling it back to the company. You're selling it to someone who's willing to pay the current "ask" price.

There are a finite amount of shares of a given stock owned by individuals at any given time, and this amount doesnt change day to day. It only changes when a company decides to sell more shares. For example, Microsoft company has exactly 9.57 billion shares owned by individuals/companies today. They will have 9.57 billion owned next week, and the week after that too.

So this idea of more or less people being in or out of the market is basically nonsense.



See answer above. What changes isn't the number of people in the market. The only change that occurs is what these people/companies are collectively willing to pay for the finite number of shares that are already distributed and sold.

When an IPO is issued, the total shares made available for sell, i presume are scarfed up before the first day ends. Again, the only thing that changes is the price of those shares. If they're deemed not valuable by the masses, the share price drops.

Yes, there are price splits and reverse splits, but these happen on a specific day and that day generally has no correlation with a bad or good day on the market.

My initial question for Tom was based on this in the Sentiment Survey area..................Trading results using the survey as a contrarian indicator

This is what confused me at first and then it seemed to tell me if the survey was saying Sell.......you should then be buying?

As far as I know there has always been a buyer and a seller in order for the markets to work.

I can see his example to some extent but yet this still needs to be cleared up better

This contrarian indicator is what I was seeing wrong with the sentiment survey

Thanks for more clear splaining and all. LOL

 

[azanon]

Moron? LOL

Milkman, i consider every other possible alternative before i will go with returning a personal attack. But in your case, you have posted nothing but rude comments every single time I post here. That being said, I truly believe it was the appropriate thing to say in your case. And yes, I can really believe you would find it humorous.

So you're telling me, well everyone, that if I sell a mutual fund but no one wants to buy the stocks that are incorporated in that fund, then I can't sell it? Hmmmm, news to me.

So what's wrong with learning something new today? Don't be offended by that.

Yes, when you try to sell a stock, there must be a buyer. If more people want to sell than to buy at a given bid and ask prices, then those two price points drop UNTIL the number of people wanting to buy and sell is equal again. In short, what changes is the price itself, not the number buying vs selling. SOMEONE always wants to buy shares of almost all stocks, unless its detined to become a "penny" stock. There are millions of people with "buy orders" at price points all along the spectrum of possible prices.

Plus, when I buy or sell a fund, I get the days closing NAV. If the market is closed, who's buying?

The day's closing NAV reflects the market prices at the end of the trading day for the stocks that compose a given fund.

You're going to make it hard for yourself if you try to think in terms of funds instead of just stocks. Mutual funds are nothing more than collectively owned securities of some type, such as stocks. The actual securities (which compose the funds) are sold during the trading day, not after hours. And when they are sold, someone or some company buys them from the fund manager who sold them because you requested him to do so.

Putz...........................

See my sentiments above. I'm willing to withdraw them when you become more open to learning something and become less of a know-it-all.

I actually dont mind know-it-alls if they actually can back it up. You cant.

Azanon

 

[Birchtree]

Has anyone ever heard of inventory?

 

[azanon]

Has anyone ever heard of inventory?

My mindreading skills are admittingly poor so i'll do my best at try to deduce which of the many responses you were referring to.

If Milkman sold shares of a fund, its possible the fund manager could just pay him, specifically, out of some cash they had on-hand. But, obviously, if enough people put in "sell orders" or requests to sell MANY fund shares, then the fund manager will have no choice but to actually liquidate some of the stocks that compose the funds to pay the people requesting sells. Looked at holistically, thats what actually happens.

If a lot of fund are putting in sell orders, then naturally the prices of those stocks that compose the fund are going to drop until sellers = buyers, and that will result in a NAV drop. Again, for every seller there must be a buyer.

Has anyone heard this saying before? Everyone has a price. That's true for stocks too. There's someone that will always buy your stocks from you, the only question is how much are they going to pay for them.

....
If that wasn't what you were asking about, maybe consider being more specific next time.

 

[azanon]

My main point in all of this, is because i cringe everytime i hear about how many people are "in the market". And I have to cringe a lot, reading the main here.

For all practical purposes, there are always the same number of people in the market. That doesnt really change. What changes is simply what the shares are worth on a given day. Folks this is the basics and everyone participating in marketing timing really should know this.

 

[SkyPilot]

Azanon,

You have yet to make a cogent point or a useful contribution. But your enmity towards Tom is abundantly clear...

sad, really...

 

[SkyPilot]

I have a neat idea; why doesn't someone discuss the topic I brought up instead of engaging in personal attacks. Should i just assume everything i said was correct, since no one has an actual rebuttal?

You seem to be adept at ASSupmtions

 

[azanon]

I have stated before that I do think there should be some accountability for encouraging market timing when the majority of experts have equated it to gambling. I suspect the staff at tsp.gov agrees with me. That's one point, this specific topic is another. So, do you mind staying on topic?

When i become interested in your opinion on whether i'm making a useful contribution, i'll let you know, SkyPilot. My recommendation? Don't hold your breath. Or maybe do..... * scratches head *

 

[fabijo]

You need to think of bears as people with more cash than stocks and bulls as people with more stocks than cash. The bears already sold their shares to the bulls - or to the companies. Yes, companies do purchase their own stocks. When there are more bulls, there is less cash to purchase stocks. The way to get cash is to sell some shares only to buy more shares. But if there are too many bulls, they're all looking to sell some shares so they can have some cash to purchase more stocks. With all of them selling and nobody buying, the stocks go down in price looking for willing buyers.

If the market is full of bears, that means a bunch of cash is on the sidelines since they already sold their shares (to bulls and back to the companies). Now all that's left is for people to buy the shares at the current price either from the comapanies or from those few bulls out there looking for some spending cash.

 

[Wolverine]

Ok......the thing I only wanted to know initially is that this sentiment survey is contrarian towards what the buy or sell signal is. Meaning as far as I see it, is that if it is showing a buy.....you sell........if it shows a sell.....you buy. Do I have that clear? LOL

 

[azanon]

With all of them selling and nobody buying, the stocks go down in price looking for willing buyers.

We're going to make progress, i'm determined! You cannot have a seller without a buyer. If you want to sell a share and know one's willing to buy it, then guess what? You don't sell it. In practice, that never happens because everyone has their price that they'll buy at.

 

[azanon]

Ok......the thing I only wanted to know initially is that this sentiment survey is contrarian towards what the buy or sell signal is. Meaning as far as I see it, is that if it is showing a buy.....you sell........if it shows a sell.....you buy. Do I have that clear? LOL

The thinking goes if there are more bulls than bears, then that is supposedly a "bearish" indicator, meaning you should consider selling. If there are more bears than bulls, then that is supposedly a "bullish" indicator, meaning you should consider buying.

My opinion personally? I find the usefulness of that as limited. There were exuberant, mindless "bulls" for the ENTIRE DECADE of the 90s (save 1994), and one would have missed out on making a lot of money had they followed those indicators then. Its usefulness is as limited as any other single indicator, usefulness being "very limited".

When market experts like Bogle and Bernstein actually become so talented that they can predict price movements, then i'll jump on the bandwagon. But by comparsion, i am an infant in terms of knowledge compared to those guys and even THEY don't know what's going to happen tomorrow. Going by logic, if someone cant say they're more knowledgeable than, say, William Bernstein, then they have no business timing.