Thursday, September 09, 2010

Reply From Swifz: For Every Seller, There Is A Buyer

From the posting:

  • swifz said...
    For every seller, there is a buyer. Money only flows into the stock market during an IPO. Money only flows out of the stock market when a stock de-list.

    If someone is pulling out his money from the stock, someone else is putting in the money. The article only highlighted one-side of the coin.

    The question is: Who is buying?

    My speculation:
    1. Foreigners
    2. Banks!

    Remember, Bernanke printed a lot of money, if banks are not lending, why not just speculate the stock market to make some profit to cover the big losses?

    The money is now showing up in commodities, that is why agriculture products are moving up.

    The next question: Should you hitch a ride up? The answer is entirely up to you.

    10:45 AM

Swifz: Long time no chat!

hmm... for every seller, there is a buyer.

That's true.

But... the posting is about Americans withdrawing money from their long term equity funds.

From the posting on 26th August 2010. Americans Pulled USD 53.279 Billion Out Of The Equity Markets

On that posting, there was a highlight of a NY Times article.

  • One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

Americans had been owning shares either directly or through mutual funds.

Yes, that posting was not about Americans selling stocks that they owned directly, but instead the series of postings highlighted via the label , keep tracks of the fund flowing in or flowing out of the equity mutual funds.

Think of it this way. Think about our local funds, our unit trust funds.

If Malaysians keep redeeming their money from the unit trust funds, how then?

And about the foreign equity fund investors.

Look at the snippet from the current ICI summary again.

Can you see that even 'foreign' investors who had invested in American stocks VIA equity mutual funds had withdrawn some 1.94 Billion for the current period too?


Gamelion said...

Stock market price control has a very direct correlation to your
ability to control the entire nation money supply !

The Wanderer said...

For s counter that is delisted -- the last seller regardless the price and time hold the cash, the last buyer regardless the price and time hold the delisted stock (toilet paper).

last time can use as toilet paper (but too rough for backside) but not now.


Market Blogger said...

I have a comment on this situation_most investors myself included have given up investing in the stock market medium to long-term.Too many times losing big capital to invest in the stock market. So, we become short-term traders and speculate instead of invest.That is why money is pulled out yet the market is going higher.
Since this is speculative capital, just beware the situation can change dramatically either way w/o much sense.

ali said...

logically, when investor redeem from mutual fund, the fund need to sell their stocks to raise money to pay of the investor who redeemed.

the question is, who is buying the stocks from mutual fund who sell?

is it possible that the investor redeemed the money from their mutual fund and invest directly into the market? maybe they think they can do better than the stupid fund manager that rely on computer bots to do trading????