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You are exactly correct, there are two sides to every trade. The remarkable, important, newsworthy event was the extreme transfer of wealth that occurred yeste
by blantonl 17y ago
You are exactly correct, there are two sides to every trade. The remarkable, important, newsworthy event was the extreme transfer of wealth that occurred yesterday.
And you are also correct, buy and hold investors were not necessarily impacted.
But the comment "a small minority participate in margin investing" is very incorrect - what do you think hedge funds do for a living?
The individual investor makes up a very very very small percentage of volume on the exchanges. Institutional investors who borrow large amounts of money to amplify returns (read: hedge funds) make up a majority of the volume during periods of high volatility.
- brown9-2 17y agoSo I guess what I am asking is how important is it if a bunch of hedge funds have a very bad afternoon? Does it matter in the long-run? I suppose the answer is that "only time can tell". I just feel as if the media pays way too much attention to the daily movements of an index with just 30 stocks in it, and that they have trained our society to do the same. I fear that paying such a disproportionate amount of attention and importance to such a relatively-not-important thing such as the daily movement of the Dow index is ultimately bad for all of us, because it leads to poor decision-making.