I'm Not Buying In

Good luck to everyone who is buying stocks, sitting on them, and thinking they will make a lot of money. Today's stock market is not really designed to do that for you. as you have noticed, the market does not always go up. Yes, a companies performance does have something to to with their stock prices, but more important is the daily news and how it is emphasized and skewed.

It is interesting and somewhat puzzling how one day investors are worried over the Greek debt and the next day they are not. When they are done with the Greeks the move on to the Italians, then Spain, then Portugal, then back to Greece.

The truth is, large investors do not make their money with the market only going up. They depend on volatility! What news gets emphasized and how it is interpreted creates this volatility. After large investors have bought stocks at a low price they need good news in the market to cause them to go up in price. Once they have peaked, they sell what they have and short sell the same stocks which causes them to go back down. Of course a good dose of bad news helps them go down faster so they can collect their rewards sooner.

The key to making money in the market is to understand the principles of volatility and understand the large investor. That is not always easy. For example, a few years ago Grant Pride an oil corporation reported it's best quarter ever. So you would think that based on the companies performance the stock would surge in price. Not so! The stock went down $4.00 that day. The reasoning was that "investors" felt that the corporation had peaked so future profits would not be as lavish. In other words, they thought the stock was over-priced. So they sold their shares.

Then I have seen the reverse. I believe it was City Group that was losing billions of dollars at their quarterly report. The stock surged. The reasoning was that City Group lost fewer billions than expected and the future looked brighter.

By the way, you and I are not really "investors" as referred to in the news. We are not real players. Our money, buys and sells don't mean much. The investors they are talking about are the super rich money movers. And how the news agencies know at 5:00 AM what all the "investors" have decided to do is beyond me, unless, of course, there is a certain amount of collusion between investors. After all, they are in the game together.