Teaching You to Trade Stocks 75: Some Miscellaneous Histories of Toying with Market Makers 1

2007/8/29 22:00:23

Of course, everything below is this ID talking nonsense, rambling in dreams. Just treat it as jokes — anyone who takes it seriously has problems.

Telling stories is merely to let everyone understand some deeper-level aspects of how the market operates. Trends are formed by the resultant force, but behind each component force are real people with thoughts and emotions. Therefore, understanding some psychological aspects is still beneficial.

Of course, for ordinary retail investors, understanding more doesn't change the attitude of being completely strict and objective about trends. Why? Because for ordinary retail investors, their influence on the resultant force is completely negligible. Therefore, their operations can be based entirely on the final result of the resultant force, without needing to concern themselves with the game between the various component forces at each moment.

But one must have lofty goals — a retail investor who doesn't aspire to become big capital is like a soldier who doesn't aspire to become a general. Whether one ultimately achieves this is closely related to each person's comprehension, cultivation, and opportunities. But sometimes the result isn't necessarily the most important thing — the process is often more beautiful. If we're talking about results, everyone's result is the same dead fish. Therefore, nobody needs to carry any burden or fear. As long as one follows the correct path, even if one can only climb to the mountainside in the end, it's still been a worthy journey.

In the market, there are certain funds that can influence the ultimate resultant force. In actual operations, capital quantity is certainly important, but even more important is technique. Even in warfare, the smaller force can defeat the larger one. Sometimes the effect created by 1/10 of the capital is greater than that of 10 times the capital — this is closely related to the operator. For simplicity, we'll only discuss operations in individual stocks here. Market-wide operations involve a dramatically increased level of complexity, and generally, this isn't something one person can accomplish. They're the result of collective forces, and to lead such efforts requires great personal charisma and historical trust, none of which can be built in a year or two.

In individual stock operations, there are exactly two types of capital that can influence the resultant force: one is the market maker, and the other is the person who plays the market maker. The common misconception is always that market makers are the most powerful, that they're incredibly fierce and ruthless, swallowing people without spitting out the grape skins. In reality, these are all banal, parroted nonsense. Indeed, quite a few so-called market makers have succeeded, but far more have been destroyed. The dead market makers outnumber the surviving ones by far. Market makers get destroyed for many reasons, one very common one being: they were destroyed by those who play market makers.

There exists a type of person in the market: their capital strength is more than enough to be a market maker, and generally, such people were previously formidable market makers themselves. But later, because securities laws and similar legislation were enacted, they didn't want trouble. Or they just became too lazy — calculating against retail investors every day was too tiresome. Better to calculate against one big player and eat enough for N meals. Or they were simply bored — watching others be market makers, they just wanted to destroy them. Whether they made money was secondary. Generally, for such people, money has long ceased to be an issue — it's purely for fun, or just to teach some nouveau riche a lesson.

Generally speaking, such people have the most extensive intelligence networks in the capital market. They've been entangled with the capital market since it was a tiny seedling — like a vine around a tree. However large the tree of capital markets has grown, the vine has wound around it just as much. Generally, major movements in the market rarely escape the eyes and ears of these people. Thus, they quickly learn whenever there's new prey to enjoy.

How to identify prey — there isn't necessarily any fixed principle. Of course, some people are more rigid, or still newcomers to this game, so they pay more attention to their targets and at least don't dare attack garbage stocks, lest things go wrong and there's no room to maneuver. But for veterans, it really doesn't matter. A stock is just a token for a game — even if it gets trashed, so what? At worst, just turn the phoenix into a chicken, then the chicken back into a phoenix, going back and forth a few times. Doesn't it just get more fun the more you play?

To be honest, stock trading ultimately comes down to the ability to combine resources. The real skill lies outside the market itself. With strong combination ability and capital that can sustain over the long term, what can't succeed? This ID has one not-so-great habit: never caring about people who've been destroyed. But in the past two years, this ID has constantly discovered that several people destroyed by this ID N years ago — note, for some of them, N is almost 10 — have actually persevered until this great bull market. They've all become among the most bullish stocks of the past two years. Upon inquiry, the people are still the same people, the songs still the same songs. These people, with crippled bodies but unyielding spirits, devoted N years of their lives to a single stock. Even this ID must say: the power of human ignorance is truly formidable. Respect, respect.

To commend the astonishing achievements of these disabled warriors, this ID will praise a few of them without naming names:

One: After that summer, one final kiss, and the market entered a long, long bear path. You too left behind one stunning downward gap after another. Perhaps nobody but this ID knows your pain. Upon those high mountain ridges, you could only chase the speed of the broader market's decline through one ex-dividend gap after another. At your most heroic, you still stood above the actual mountainside, not far from that peak that caused you such pain. Finally, you survived that last bloodbath. Spring came, and the cats began their mating calls again. You crossed over those gaps one by one, burst through that once-desperate peak. It turns out there are still peaks beyond peaks. You should feel at peace now.

Two: From mountaintop to valley floor, a drop of over 90% doesn't necessarily mean the end of the story. Later, you finally understood that after returning from the valley to the foot of the mountain, just another half year could bring a 1,000% ascent to an even higher peak. At this point, those N years of torment are probably the best memories of a lifetime. The person you're most grateful to now — could it be the one who gave you N years ago the opportunity for the best memories?

Three: Only those who can endure a brutal 80%+ drop and still stand firm can attract a rise of over 2,000%. This ID will not feel the slightest guilt for past cruelty, but for your ability to stand firm, this ID gives you four words: at least you're tough.

Four: When you laid out a staircase of limit-up boards one after another to break through all previous peaks, how many people knew of your pain from N years ago? Those staircases have already become famous throughout the land, but during those days and nights N years ago, what exactly was it that mended that broken heart? A rough look shows a maximum decline of 94%. Truly, the fragrance of plum blossoms comes from bitter cold.

Don't think being a market maker is a cushy job. If ordinary retail investors had even a fraction of the endurance demonstrated by these four outstanding models of suffering and perseverance, it would be hard for them not to succeed. Look at them — 94% down and still achieving fragrance from bitter cold. Those who get shaken out by a few days or weeks of position washing and end up spent — they might as well go buy tofu and head home.

Those who can endure are few. Those who can't ultimately end up making wedding dresses for others. Those newcomers buying at the bottom of the grand canyon should know that among those bones, probably the most numerous are those of so-called market makers. Looking at 000338 at 100 yuan, this ID seems to see the gray shadows of the Tang brothers behind prison bars. Here, let's revisit the five-character poem that this ID posted on the day 000338 hit its lowest point — Upon seeing a Xiang Torch (Hunan Fireworks) billboard, impromptu five-character quatrain. (2007-05-15 15:14:19). Some might ask again, why was that price level never seen again after that day? Because if that price level appeared again, the heavens would weep themselves old.

To destroy a market maker, you first need thorough understanding of their capital situation, sources, and so on. Those nouveau riche who just have some money and rely on bribing a prefect or two to swagger around with borrowed authority — they're the ones who most deserve and are easiest to deal with. Generally speaking, weaknesses in their capital are the best premise for attack. Of course, those without capital weaknesses can also be attacked, especially those unskilled new market makers. In the market, newcomers are fresh meat — being devoured is the natural order. There's another type: those who've just had a success and are riding high at the G-spot. These make the choicest hunting targets.

Of course, some old foxes can also be attacked, but once you engage, you must be prepared for a long-term war. So unless there are special reasons or you're particularly bored and looking for entertainment, generally one doesn't play with old foxes. But in reality, this ID frequently violates this so-called general rule.

Whew, looking back, this dreamtalk has gone on quite long. Let's continue next time.