What I see is a market traded on "perception", and the volume of trades come from Mutual Funds and Money Mangers. Then followed collectively by small traders.
Now I have more than a few years of experience dealing with them all, including the larger Money Managers handling a few billion dollars each. In my research of Money Managers (I was only talking about $4.0 million, a small amount by most standards, but enough to get into the trading room, and have the white table cloth lunches.
I continued to ask for their "risk management" methods. Without exception none had one., and that was a lot of different money managers, and close to 6 months of interviews.
The common answer is they pick stocks that "out perform" the market. I am not going into all the details of how they "all" work, but let me say it is a contest.. with them over market performance. Client's equity be damned. It is about how they compare to other managers. They looked at risk management as a cost that would hurt their performance. They are happy if the market drops 40%, their accounts only drop 38%.
Something that I was not happy to see, but I was one of three handling the funds and the other two out voted me and picked one. I watched their transaction very close, and noticed the levels they bought, but never found a point they sold.
Why did they never sell? Because when the markets were soft they only quit buying, and new monies coming in were held until "they" determined the market was strong again.
Fund Managers, and Mutual Funds are given way to much credit for what they do, especially by those that don't know what they do "Media",., LOL
Example, I tired to liquidate all our holding 6 months prior to the break in OCT 87'.. each time my motion was "tabled", and had to wait another month.
Now the one I see coming is going to be far worst than the one in 87'.. My opinion.
By the way if you remember the break in 87' the Media said it was small trader liquidation.. Our Fund Manger had liquidated 50% of our holding on the low.. and several others did the same. It was panic on the part of funds, and those that were not selling they were not buying. The volume of sells far out weighted the small amount of buying.
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So if I express an opinion that it is raining please do your own research before accepting it is in fact raining.