Someone Knows Something Part 2
How institutions actually trade (hint they don't want you to know)
I got a ton of positive feedback last week on breaking down the myths of ‘someone knows something’ whenever a stock price jumps suddenly.
So this week, going to explain how institutions and big actually tend to trade 99.9% of the time. Then finish it up with times that you can actually know something and how to get good pricing around that info.
There is a lot of misinformation out there. Now, I am not going to naively pretend that there isn’t a ton of sketchy behavior that goes on with 7, 8, and 9-figures on the line. Nor will I pretend that the regulatory agencies are omnipotent or even good at their job of regulating. But people have some really wild ideas.
You will hear people claim all sorts of crazy theories like every institution on wall street is day-trading billions of dollars all in some conspiracy to prevent them from making money.
“No Carl, BlackRock does not have a picture of you in the office with a goal of monitoring your trades on your $15,000 portfolio to keep you down.”
As someone who worked at a portfolio manager for a bit, and has many friends at various roles across the equity world, it is actually much less ‘wolf of wall street’ and much more ‘bureaucracy’.
So let’s talk about trading at big firms really is, how they actually tend to make trades, and finally hit on some of the instances where you can actually know something about the stock price ahead of time. You can put the tin foil hats on again after this post.