Knowing you could be a top investor is better than being a top investor
Retail investors always wonder if the big stock traders are able to manipulate the stock market and how they do it. The first thing is mindset. Big stock traders see the bigger picture and know that losses are sometimes required in order to achieve large gains. They don’t in a sense deal shop for cheap prices. Instead they shop for prices that will have the biggest effects. An example would be a stock selling at 1.31. A retail investor would put in to buy at 1.30 or below. A Hedge fund will buy in at 1.34 or a little higher. Retail investors goal is to try to get every bit of gain they can of a stock.If a Hedge fund is buying it they have a percentage of say 10-15% they want to make and are will to sacrifice 5% of that if it means getting the 10% quicker.
Each buy has different results. The retail investors purchase pulls down the stock. The hedge funds purchase raises the stock up. Which one is going to be more inviting? A stock that just lost 1-2% or a stock that just gained 1-2%? That’s why the hedge fund doesn’t mind paying the extra 1-2% because there’s more value in attracting investors that will send the stock up.
That being said hedge funds also want to drive the stock up, just enough so they can short it back down. This is why hedge funds don’t like retail investors. Retail wants to drive a stock up as high as possible which then causes too many wanting to short it back down and that increases interest rates.
This is where the market decides if you want to be a big time investor, the problem with becoming a big time investor is you have to sacrifice your morals, if you have any. This is why I could never become a great Walk Street investor because I wasn’t willing to trade my morals for wealth. And for me that was shorting a stock down even when I was guaranteed a big payout. All the enjoyment was taken out having to cheer for a stock to crash. I would rather take losses cheering and hoping for it to go up, at least it feels better. In my opinion. So sometimes people calling you a bad investor is a compliment. 😉
Each buy has different results. The retail investors purchase pulls down the stock. The hedge funds purchase raises the stock up. Which one is going to be more inviting? A stock that just lost 1-2% or a stock that just gained 1-2%? That’s why the hedge fund doesn’t mind paying the extra 1-2% because there’s more value in attracting investors that will send the stock up.
That being said hedge funds also want to drive the stock up, just enough so they can short it back down. This is why hedge funds don’t like retail investors. Retail wants to drive a stock up as high as possible which then causes too many wanting to short it back down and that increases interest rates.
This is where the market decides if you want to be a big time investor, the problem with becoming a big time investor is you have to sacrifice your morals, if you have any. This is why I could never become a great Walk Street investor because I wasn’t willing to trade my morals for wealth. And for me that was shorting a stock down even when I was guaranteed a big payout. All the enjoyment was taken out having to cheer for a stock to crash. I would rather take losses cheering and hoping for it to go up, at least it feels better. In my opinion. So sometimes people calling you a bad investor is a compliment. 😉
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Mcsnacks H TupackOP : And I forgot. The retail investor will hurt his investment if there is say a wall at the 1.32 price. So bidding above a wall even tho difficult to understand means that you have less chance of suffering losses. And it can be the reason the stock gets thru that wall.