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This is among the most ridiculous statements I have heard about how the markets work. Its actually the exact opposite, the lesser the people the lesser the fluc
by bushido 13y ago
This is among the most ridiculous statements I have heard about how the markets work. Its actually the exact opposite, the lesser the people the lesser the fluctuations/volatility. And this is not just about the markets, it applies to most things. ex:
1. Single drug company selling the life changing drug = High near-fixed-global price | As soon as more drug companies can sell increase price competition, higher variance in generic pricing, different rates globally
2. All company valuations remain relatively steady until an IPO
3. If a man/woman suddenly gets a lot of suitors their current relationship if less than optimal may crash and burn , in the absence of alternatives the relationship may have a better chance of survival.
- akjetma 13y agoThe transition from an oligopoly/monopoly to a market where price is dictated by competition is different than the transition from few competitors to more competitors.
- fthssht 13y agoThose examples are a joke. What about the volatility of big cap vs small cap stocks. Isn't that more relevant than suitors and relationships?
- bushido 13y ago1. The point on suitors and relationships was meant as a joke but is a relatively easier example to use when explaining a concept to the layman. 2. Big cap vs Small Cap != Necessarily More Relevant (its relevant to the principle of volatility, but requires more complex understanding. This understanding is absent for the OP of comment thread I replied to - to explain further the presence of market makers, prop desks/professional traders, institutional block trades, quant. systems, availability to borrow shares to short, short sqeezes etc. that are present in large cap equities/futures/opts markets reduce volatility and skew the data towards the hypothesis that more owners reduces volatility. A number of these influencer's make the topic relatively more complex to understand for a layman and the people who feed them information aka news media).