by Gavin M.
I've been at this for several years now. I trade different markets - futures, forex and of course the stock markets. Out of all the markets, the stock market generates the most intrigue and speculation. Before you read further, please know something: just because I hate the stock market does not mean I don't like trading. On the contrary, I like trading stocks but I hate the market they are in because of all the lies, deceit and rampant cheating.
The stock market is the only place where funds and banks who are active in trading stocks can also issue upgrades and downgrades to drive prices up or down. Imagine you own a Ford dealership and you also give good and bad reviews on the Ford vehicles on your lot depending on your mood of the day. It is after all, legalized promoting really depending on your position. If you feel like shorting today, you short the stock then issue a press release the next morning saying you're underweight or you changed your rating to a SELL. Voila! Instant profits. The best part? It is all LEGAL.
I will not discuss the issue of HFTs because you know, what is the point. I can write thousands of lines about it and it will still be around and as contentious as ever. The other reason I dislike the stock market is the fact rumors can be spread so easily. Why? Because they distort the fundamentals and the day to day swings of the price. Again, before you vilify me, I like trading these rumors because 90% of the time they are false. But I hate the rampant rumor mongering because it just ruins the overall longer term trade setup.
Last but not the least we get to the final reason I really despise stocks - the fabricated GAAP / Non-GAAP earnings reports. These numbers are made to be complex yet "good-looking" to fool investors into thinking the company is doing fine. All you need is a very creative accountant or CFO and you will have a nice looking earnings report that can even impress your dog. If you decide to ask a company to get an independent auditor instead, well the easily-bribable folks over at PwC or Deloitte are always ready to make it look like their findings also affirm what the company is doing GAAP or non-GAAP!
In the end, the markets remain the fastest place to increase or decrease your invested capital. However, it is increasingly fraught with hazards that remain invisible to the mom and pop investors. You can do away with some of these hazards by indexing or by only investing in blue chip stocks. But, at the end of it all, if you get in at the wrong time, you still stand to lose a lot of your investment.
Giddy up folks!
Traders from Equity Sense will be writing on this blog on positions and other market-related things.