He calls Goldman and can't get a price to reflect an accurate pricing of items which SHOULD be priced 200-300 % higher. FINALLY, Michael Burry walks in to Goldman, and the clerk tells him more or less "we are now prepared to pay you market value on your huge short instruments?" Burry responded, "you mean you have now balanced your portflolio so that you are no longer long, and can afford to let them sell at market?" (loose translation). The guy returns : "I am not sure how to respond to that." That scene, plus the insight into daytrading “supply and demand” zones (google Sam Seiden) provides a great insight into the way the money flows in the huge banks, and a good insight into market behavior, and the way things are going right now. More than that, it gives some hints to understanding how to strategically approach this present situation.
Big commercial institutions don’t just “buy” or just “sell.” They can’t. They are so big, and control such vast amounts of money, that dumping huge orders into the market skew, distort and “bully” the markets, plus they get poorer fills. It is their job and strategy to subtly push the market around to “position it” to fill these large orders. Seiden introduced me to this. He observed, as a clerk for a large clearing firm, that before market open he had HUGE piles of order slips, which he separated into “buy” and sell” on right and left, and then organized them into ascending prices. His insight was that these orders sit there if price imbalances cause the market to “move away,” AND THAT IT IS IN THE INTEREST OF THE PLAYERS TO MOVE THE MARKETS BACK TO WHERE THESE ORDERS CAN BE FILLED. There is a whole school of retail trading that has grown up around this, with chart reading records of buy and sells, along with “level 2” orders (a more advanced buy/sell display), seeking to find the “levels” of unfilled supply or demand orders. This helps the retail trader to discern where the “big money” is and trade these levels.
The interesting point is that when you marry this with Burry’s scene, you realize that banks are “invested” in large positions, and they can’t just “get out” of them. They have to trade, then wait for the dust to clear, even entering orders against their own trading goals, to prop up/depress the market, for them to get in or out at better prices.
I believe we are in the “mother of all panics” and that all the commercial banks would desperately like to get out of equities, but can’t. It is in their best interest to talk up the nonsense that the interest rate rises have killed inflation (!!!!!!), the correction is over, the time to buy is now, and we are entering a new bull market. This is strictly window dressing to stampede retail traders into equities, and give them soft targets into which to sell. Moreover, they will spin stuff like Microsoft’s failure to meet earnings, and Amazon’s duplicate failure, as a WIN! (they won’t just do that, they DID that last night! Dow up 150 points pre market).
If the fed “only” raises rates by half a point, today I look for a 500 point rally today. If they raise by .75 points, the pundits will slobber and shout that “this is aggressive tightening and will ‘slow inflation’” leading to freedom to gush money again, soon… so you should buy, buy, buy.
Once their books are clean from all the crazy happy money froth, and all the suckers have believed their brokers, they will let this thing go…. And I am telling you, it is NOT going to be pretty.
Till then, expect every swoon to be followed by “The bottom is in! The worst is over! The time to step up is now!”
I am playing short term rallies of course. But the incessant Jim Cramer type nonsense needs to be evaluated for what it is, which is paid mouthpieces for protecting the big guys.
They are NOT your friends, and view you as chickens to be plucked.
Big commercial institutions don’t just “buy” or just “sell.” They can’t. They are so big, and control such vast amounts of money, that dumping huge orders into the market skew, distort and “bully” the markets, plus they get poorer fills. It is their job and strategy to subtly push the market around to “position it” to fill these large orders. Seiden introduced me to this. He observed, as a clerk for a large clearing firm, that before market open he had HUGE piles of order slips, which he separated into “buy” and sell” on right and left, and then organized them into ascending prices. His insight was that these orders sit there if price imbalances cause the market to “move away,” AND THAT IT IS IN THE INTEREST OF THE PLAYERS TO MOVE THE MARKETS BACK TO WHERE THESE ORDERS CAN BE FILLED. There is a whole school of retail trading that has grown up around this, with chart reading records of buy and sells, along with “level 2” orders (a more advanced buy/sell display), seeking to find the “levels” of unfilled supply or demand orders. This helps the retail trader to discern where the “big money” is and trade these levels.
The interesting point is that when you marry this with Burry’s scene, you realize that banks are “invested” in large positions, and they can’t just “get out” of them. They have to trade, then wait for the dust to clear, even entering orders against their own trading goals, to prop up/depress the market, for them to get in or out at better prices.
I believe we are in the “mother of all panics” and that all the commercial banks would desperately like to get out of equities, but can’t. It is in their best interest to talk up the nonsense that the interest rate rises have killed inflation (!!!!!!), the correction is over, the time to buy is now, and we are entering a new bull market. This is strictly window dressing to stampede retail traders into equities, and give them soft targets into which to sell. Moreover, they will spin stuff like Microsoft’s failure to meet earnings, and Amazon’s duplicate failure, as a WIN! (they won’t just do that, they DID that last night! Dow up 150 points pre market).
If the fed “only” raises rates by half a point, today I look for a 500 point rally today. If they raise by .75 points, the pundits will slobber and shout that “this is aggressive tightening and will ‘slow inflation’” leading to freedom to gush money again, soon… so you should buy, buy, buy.
Once their books are clean from all the crazy happy money froth, and all the suckers have believed their brokers, they will let this thing go…. And I am telling you, it is NOT going to be pretty.
Till then, expect every swoon to be followed by “The bottom is in! The worst is over! The time to step up is now!”
I am playing short term rallies of course. But the incessant Jim Cramer type nonsense needs to be evaluated for what it is, which is paid mouthpieces for protecting the big guys.
They are NOT your friends, and view you as chickens to be plucked.