Halls of Shrewd'm / US Policy❤
No. of Recommendations: 4
I have a "Quotations" file on my laptop, which in previous eras might have been called a "commonplace book"
https://en.wikipedia.org/wiki/Commonplace_book#Eng...For each quote, I try and reference the original source, but here's one I forgot. From its placement, it's probably September-ish of this year; from the content, it might well be a Shrewd'm author:
"
People who "buy and forget" for months or years at a time have no effective influence on market prices. Their votes don't get counted. In effect, it's only the votes among the people with eyeballs on screens that set the price. Arguably they aren't the most rational ones on average, which might explain a lot about price movements."
Anyone hear recognize it/remember the source?
Thx
-sutton
(A rainy winter's day lagniappe for reading this far:
"Adieu; my frolic days have fled,
And after all youth's jubilee,
There's nothing now will comfort me
But a good fire, and wine, and bed."
Morris Bishop, Ronsard: Prince of Poets (1940; rpt. Ann Arbor: The University of Michigan Press, 1959), pp. 113-114
No. of Recommendations: 5
No. of Recommendations: 0
Dang it. I *did* that before I posted and got nothing. Grrr
Thank you! for, uh, doing it right
--sutton
who also today can't find a box in the basement he *knows* is there
No. of Recommendations: 6
Jim:
I'd add a small refinement:
...the weighted average of what all investors who are watching and willing and able to consider a potential trade that day.
People who "buy and forget" for months or years at a time have no effective influence on market prices. Their votes don't get counted. In effect, it's only the votes among the people with eyeballs on screens that set the price. Arguably they aren't the most rational ones on average, which might explain a lot about price movements.
Jim and others might consider a refinement to the refinement: prices are affected only by the small subset of investors who are willing and able to consider a potential trade, and who actually get around to putting in a buy or a sell order. And you might even say that a buy or sell order that is far from the current bid and ask have no effect either. In fact, it is really ONLY the 2 investors who are currently asking for the lowest price or bidding the highest price that are influencing the current quote. If they can come to a deal, then it will be the next 2 investors, a few seconds/minutes/hours later, who are the only ones affecting the price. Having eyeballs on screens, but not commiting to buying or selling, won't do anything to the price.
dtb
No. of Recommendations: 9
Jim and others might consider a refinement to the refinement: prices are affected only by the small subset of investors who are willing and able to consider a potential trade, and who actually get around to putting in a buy or a sell order. And you might even say that a buy or sell order that is far from the current bid and ask have no effect either. In fact, it is really ONLY the 2 investors who are currently asking for the lowest price or bidding the highest price that are influencing the current quote.
This is true, as far as it goes, for a single trade. No argument.
But I think of it a bit more crowd-like: the ones who are just slightly outside that pair who traded (the ones who are considering, but not quite willing, to trade during that time interval) are the ones who in effect choose which two will get matched up and do that one specific trade, and by extension the price at which they trade. Market depth really does matter in short intervals, as for most stocks there is some sort of steady stream of bids and trades sloshing back and forth. In effect, the current pair will trade at the price that is some sort of time- and volume- and price-weighted average of all the bids very close to the current best bid and ask.
Jim
