I read on blogs, commentary, that the markets are 'broken' or dysfunctional, even the term schizophrenic has been used.
The point is the markets have always been a perilous place to trade in and if anything they (markets) have never been fair, normal or egalitarian so nothing has changed since the inception of markets and trading. If you believe that something has gone wrong and you think the markets should return to a normal trading environment, you probably shouldn't be trading in the markets. If you are a small fry trader trying to hit the big trade of the century, you most likely wasting your time and money (maybe you might find that Coca-Cola stock, I don't know... but Lithium stocks look tasty).
At the end of the day you don't mean shit (to the powers at be), you never did, as soon as you realize this you won't bother throwing your mind into a self imposed psychosis as you realized the reality of the situation hasn't changed - you should just try and survive. The market as it is and as it has been for hundreds of years is not designed for the mug punter, nor is it forgiving to a mug punter (i.e no one will 'bail' you out). The best bet is to scalp a trade here and there, go long on a solid blue chip, gamble a little of FX/Options/Futures and maybe, just maybe you could eke out an existence.
The markets are ruled by conglomerates or a cartel of investments banks, retail banks and hedge funds all on billion dollar taps. Yeah they fuck up, like in 2008 when half of them should have been dismantlement and restructured. But yes we know the story, us the tax payer bailed them out. Which is true, a suicidal policy by governments globally that if you have been watching the news (re: protests, government voting backlash etc) people are saying to the powers at be: fuck you. This 'fuck you' attitude will probably snowball into 2011.
In the meantime the Wall Street/banks/hedge fund overbidding will continue as the risk engines that are the banks, fueled by billion dollar money flows from central banks, will try and hedge mega $ money return bets. There will be undoubtedly some huge long positions getting bought up, like some trader taking out a billion + position on copper please refer to 3billion copper position held by one trader (update 1) or an equally big position on a bank stocks, playing a futures straddle on the Dow going to13000, or a USD play going short against arbitrage play on gold price going upward, a commodity futures play that oil will head down to $80 and some fucking oil trader covers the losses with another loss and so on.
Or a hedge fund sending the market down on a HFT (High Frequency Trading) driven flash crash attributing by ETF (Exchange Trade Fund) liquidity problems, and sending long position/s into short sells (Like May 6th 2010 flash crash). The Copper play unwinding and any derivatives connected to copper, or again ETF's, causing the futures market to sell and sending sell orders back to the copper derivative market; a house of cards also taking out miners (copper or otherwise) equity values in mins.
You get the drift, the movers and shakers of the market are also some of the biggest losers too...as the above are just examples of market plays gone south with million to billion dollar losses. Anything is possible (especially in an overbidded/bubble market) with trades going haywire as I have absolutely no faith in larger institutions and their risk management. We are due for another major trading loss.
So along with the copper risk is the gold risk a feverish buy-up on the gold price via SPDR Gold Trust, Bloomberg ran an article on this please refer to this link.
Same thing (gold bubble) as the copper price, you'll have an overbidding market on a scarce commodity, once the price bubbles becomes unsustainable and a sell price sets in again a flash crash, destroying the wealth of smaller investors that piled into non physical gold contracts, via ETF's.
The more risk in the market as far as the larger money players (say 3-4million a trade, as opposed to 5k) the more likely that someone, or something will fuck it up and it all comes down. If anything this is your equilibrium of market forces or a natural correction of the over excesses (bloated banks/investment banks) which I think most people are kinda waiting for; a payback to greed mixed with the mantra that 'everything comes to an end'.
We get another economic iceberg, and it's coming - it's FUBAR. The great economic reset.
That is reality, deal with it. So relax. Enjoy the show ( and try and not lose money).
See you in 2011 (Happy new year)
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