Market Structure EDGE Blog
Market Structure EDGE Blog
What’s Going On
The country is closing amid Covid cases. Simultaneously, the Shiller PE ratio of earnings in the S&P 500 is 33, a level exceeded in history only at the bursting of the Internet Bubble in 2000.
On the Skids
If electoral processes lack the drama to satisfy you, check the stock market. Intraday volatility has been averaging 4%. The pandemic has so desensitized us to gyrations that what once was appalling (volatility over 2%) is now a Sunday T-shirt.
Serenity
Give us courage to change what must be altered, serenity to accept what cannot be helped, and the insight to know the one from the other. It’s a good life rule, a thoughtful notion after elections. And a way to see the stock market.
Placid
The story now is how’s money behaving before The Big Vote? Depends what’s meant by “behave.” The Wall Street Journal wrote for weeks that traders saw election turmoil…
What’s In It?
We rode to the Colorado National Monument this week with our good friends from Sun Valley. There’s a lesson in it about life and stocks both.
Political Sentiment
This week brings the last pre-election monthly options-expirations cycle. It’s the final time to take or manage risk with options that expire after votes are cast.
Vahlcue
You’re wondering what the heck “vahlcue” is. It was up almost 4% in the last hour yesterday as stocks tipped off the diving board.
Gaffes and Spoofs
You all remember the Fat Finger? It’s a gaffe, trading-style. In one 2014 instance, if the record can be believed, somebody in Japan accidentally tried to buy $700 billion of stocks including more than half the total outstanding shares of Toyota. The trades occurred...
Supply and Demand
Supply and demand affect stocks the same way they do products in any market. Yet the supply of product – shares – is almost never a consideration. Traders just trade. Public companies suppose that telling the story to more investors will create volume and drive the price up.
Volatile Liquid
There’s a beer in this for you. A glass of rosé from Provence if you prefer. What’s the most liquid stock in the US market? Let’s lay the groundwork. Stock exchanges describe market quality as low spreads. Spreads have never been tighter, they say, and costs for...
Market Structure Basics
Roll Call
Apr 21, yesterday, is Texas A&M Aggie Muster. Aggies everywhere gather to say “here” for Aggies lost in the past year, a roll call. It’s more poignant this time for my Aggie, Karen, and the many friends and family hailing from College Station. Gig’em, Aggies....
Money for Nothing
How much does free money cost? Everything, apparently. The play Hamilton by Lin Manuel Miranda has grossed over $620 million, seventh all-time on Broadway but still a long way from Phantom of the Opera, Wicked, and Lion King, theater’s billion-dollar trio. Hamilton is...
Benjamin Graham
A decade ago today, stocks flash-crashed. I’m reminded that there are points of conventional market wisdom needing reconsideration. It’s not because wisdom has diminished. It’s because the market always reflects what the money is doing, and it’s not Ben Graham’s...
Reg Nemesis II
In the Colorado mountains at Steamboat Springs, the pixie dust florescence of greening aspen leaves paints spring onto the high country. In the bowels of equity markets there gurgles an emergent leviathan (maybe I should choose different imagery – but we’ll talk about...
What’s Changed
We’ve been pandemicking across the fruited plain and through the stock market for better than two months. Now what? I still rue my decision Friday Mar 13 to delay skiing in Steamboat till the next day (it was Fri the 13th after all). The next day the slopes closed for...
Blocking Volatility
The NYSE has proposed lowering the fee for trading to $0.10/100, or a tenth of a penny per share, or 10 mils. Did you know there’s a booming market where brokers routinely pay eight cents per share or $8.00/100 shares? What market? Exchange-Traded Funds (ETFs). We’re...
Rules and Money
There are two pillars to market intelligence: The Rules, and The Money. By market intelligence, I mean information about what’s pricing a stock. So, translating, information about what’s pricing a stock must derive from the rules that govern stock-trading, and how...
Ticking Down
In 2016 to much fanfare, the SEC and the stock exchanges smashed a bottle of champagne on the looming bow of a tick-size study and launched that battleship into the markets. Two years later the tick study is limping to port in a lifeboat. For those of you thinking...
Streaming Market
Spotify ditched convention with its direct listing on the NYSE. It didn’t raise money or ring the opening bell. It gave shareholders a way out. It’s a touchstone for the state of the capital markets. CrunchBase says Spotify has raised $2.6 billion in 22 funding...
Auctioning Profits
What’s the closing auction worth? A member of the investor-relations profession last week posted a story for community discussion on a CBOE BATS proposal to open day-end auctions to exchanges that don’t have listings. (Editorial note: The SEC has now approved the BATS...