Quote:
Originally Posted by lovemoney View Post
That would make sense if I understand what orange is saying correctly. MM, market maker (or middle man, lol) would account for a buy for every sell or a sell for every buy. But since your not dealing with just two parties but three, the buyer, MM, and seller, then the buyer/seller ratio is not always going to be even steven because the buyer's purchase from the MM is not always gonna match what the seller sold to the MM. The MM sometimes ends up holding some of the shares that he aquired.
"The MM sometimes ends up holding some of the shares that he aquired."
ROFL, lovemoney, we're creeping closer to the truth. fact is, The MM usually ends up ends up selling us more shares that s/he has! and welcome to the creative accounting concept of "naked shorting", which provides us with the blessings of almost unlimited market liquidity. academics who study the effect of this have come to the interesting conclusion that, depending on which stocks you hold, anywhere from 10-60% of it is pure-dee counterfeit. yup, that's right. thin air LOL. but for the sake of profit we all pretend that it's real. it's kinda like a musical chairs game that's been going on for abt 50 years or so. so far, the music has kept playing and everybody's happy.

but one day, what if some stupid knothead decides they want a full accounting? in other words, what if somebody finally says, "hey, let's audit all the brokers to see how much stock everybody has and compare that to how much each company has actually issued". well, then the music stops. hmm- that would mean the mm's and brokers would have to come up with a lot of cash fast, more cash than they actually have. and you know what that means. and this is just one more reason why a lot of us most of the time don't hold any longer than we have to.
i had a couple knothead links but they're in my other browser- lawsuits by companies demanding that full accounting, suing people like NITE and others. silly knotheads, wanting to know why their stock price stays depressed, claiming that nice people like NITE have diluted it to death with counterfeit shares. tsk, tsk!