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A Tribute to Traders, Entrepreneurs and Angel Investors

We have all kinds of Hallmark holidays in America but no tribute to Traders, Entrepreneurs and Angel Investors.

In fact, as usual, the government has it very wrong these days.

They want to make it tougher for accredited investors to invest. Fred explains it in his post .

There is a trader tax that is just mindless . I am all for a leverage tax and asshat banker tax, but traders just trade what they see.

I have been starting companies since high school. I have been telling people that Stocktwits and Social Leverage are my last, but I imagine that’s unlikely. I have been trading for 20 years and although I do it less and less, I will never stop. The breadth of vehicles and markets to trade are a tribute to the importance of the trading business. Traders are a fundamental necessity to build markets. Every trade is a valuable leasson for both sides of the trade. Angel investors are an invaluable source of capital for entrrepreneurs and the whole American way of life. I will be an angel investor until I die. Everyone of my start-ups has been angel backed. The three groups of people collide/collaborate more than any other that I have witnessed.

I propose January 4th of 2010 to be Trader, Entrepreneur and Angel day. It will be a day where traders, founders and angel investors recognize the talented and hard working people around them and get some recognition themselves. We won’t take a day off because we hate too, but I assume once the banks get hold of the news, they will shut down for the day. In fact, kick a banker will be a part of our holiday as well.

Who’s with me?

  • http://www.timothysykes.com Anonymous

    I like it but why January 4th–first day back after holidays, all busy people will be busiest, how about tuesday january 5th…easier to get press on tuesday too :)

    • http://www.howardlindzon.com howardlindzon

      Good idea

  • http://www.timothysykes.com timothysykes

    I like it but why January 4th–first day back after holidays, all busy people will be busiest, how about tuesday january 5th…easier to get press on tuesday too :)

  • Pingback: uberVU - social comments

  • http://www.howardlindzon.com howardlindzon

    Good idea

  • ppearlman

    “kick a banker” deserves its own day

  • ppearlman

    “kick a banker” deserves its own day

  • http://www.victusspiritus.com/ Mark Essel

    I understand the awesome of Angels and Entrepreneurs, can you explain to a layperson the important role of the trader?

    • http://www.kidmercuryblog.com kidmercury

      there is no important role for traders, it does not serve society in any meaningful way. some folks will try to come up with some phony logic about how traders drive things to the “correct” price…..lol, i guess they are conveniently ignoring the past 10 years during which traders, particularly those of US markets, speculated to create bubbles that resulted in higher real world prices for consumers and wreaked havoc on the economy, which of course we are all paying the price for now. i don’t blame traders for creating these bubbles (i am a trader and run a trading site for a living), as they are just taking advantage of the casino environment created by inflationary monetary policy, though i do find it entertaining when they act as though their profession is noble in some way. contemporary trading is just like gambling. i don’t hate gamblers and encourage them to do what they like and be free — but i don’t think they deserve a holiday or any kind of recognition for their “service to society,” lol. maybe they should try serving society first, then take a holiday afterwards.

      i also have a beef with the term “angel investors” and when these “angel investors” shorten their job title to just “angel.” lol, wtf, so ridiculous and pretentious. i’m going to start calling myself a “god entrepreneur.” just “god” for short. :)

      not hatin’ on howard though, he seems like a good guy. plus he beefs with arrington and jdawg, that’s always fun. :)

      • http://www.howardlindzon.com howardlindzon

        I will defend this in a bit. Let me digest the sunday attack :)

      • http://www.howardlindzon.com howardlindzon

        ok kid…lookslike we will never agree on this but here goes.

        There are thousands of important roles for traders.

        FIRST – they are entrepreneurs as they live by what they kill and you can hate the playa’s but it’s misplaces. Almost all traders are disciplines and work within the rules. The cheats are not good traders, they are cheats. They are a product of a system and morality gone bad.

        Traders ARE good gamblers, but gamblers is a dumb activity and should bnot be compared with trading.

        Traders are not just stocks and bonds and commodities, its all goods. It’s a service. They provide liquidity to markets and we neeeeeeed them. What we DON’t need is our leaders of the big banks creating leverage vehicles for those traders. Leverage is a tactic and became a strategy. that’s what needs to be taxed. that’s like letting people consume steroids until they can break a 2 minute mile. it can happen, but no one needs it.

        wrt angels, who cares what they are called. I mean the risk takeers that back and entrepreneur out of their hard earned savings to help move ideas along. period.

        your beefs are fine, but this is a blog post and you are reading way too much into it. I like to keep things simple. traders, entrepreneurs and angels are great.

        go watch football and watch fred’s back :)

        • http://www.victusspiritus.com/ Mark Essel

          Solid counter Howie. You do realize Kids over the top elbow off the top rope onto traders elicited some great info from yourself. That’s comment gold in my book. Great value for my attention from both of you.

          Rationale debates that are hypercritical of positions really help outside folks understand better the forces at work.

          10/10 blogging!

          • http://www.kidmercuryblog.com kidmercury

            lol, thanks mark! elbow off the top rope is my trademark move. :)

            beefs in blog discussions have great value for all, no doubt.

      • http://www.aiki14.com aiki14

        Not sure I agree with the first part, so I guess this is phony logic, but I will point out that the stuff that traders didn’t trade, the illiquid derivatives and swaps is a large part of the problem. The entities that deal in these things took traders out of the process and therefore hid the destructive force they held. Also it is worthy to note that some of us have been in this trading game longer than 10 yrs and were keeping things going when the monetary policy was very different, and the gambling mentality so prevalent today was less pronounced. I have no delusion of nobility, but I think there is more of a service to society in what we do than you give us credit for.
        As to “angel investors” I have never seen a business card with that on it, I have been an “angel investor” in that I have provided funding to start ups when the traditional lines of credit were unavailable to them, but my card reads Partner in an investment firm. The invocation of the term originates entirely with the recipient of the funding, not those who offer it.

        I am in favor of the holiday as Howard has proposed it, and when the real traders wash out the gamblers and the system reverts to the mean our value to society will be more obvious.

        • http://www.howardlindzon.com howardlindzon

          Amen

        • http://www.kidmercuryblog.com kidmercury

          as howard can tell you i hate the fed with a passion, people will be talking about the weather or baseball or whatever and i will find a way to ruin the conversation and make it about the fed and how awful the fed is and how much it is robbing us. so yes, the fed is the main reason for all these bubbles and the shameful disgrace that is the US financial markets. but traders are there, taking the bait the fed gives them to create the dot com bubble, the bubble that sent DJIA to 14,000 and oil to $150+, and even the current reflationary episode. it takes two to tango: the fed is definitely leading the dance, but the traders are all too willing to ignore that these bubbles, which they create and profit from with their trading activity, and which have come at the expense of a devalued dollar over the past decade, and thus the current wall st environment amounts to a transfer of wealth from dollar holders to equityholders/active traders.

          in all fairness, if your game goes back more than 10 years, if you are pre-greenspan, than yes you are from a different era, a more legitimate one. though as i noted i don’t blame traders too much, everyone has to make a buck and i personally trade because i know if i don’t i’ll just get screwed over holding dollars. so i am not so much of a trader hater, i just think it’s basically the same as gambling, but with much better odds than vegas gives you.

          with regards to angels, lol, no worries, i am just joking about that comment. :) i am passionate about real capitalism and admire investors like yourself who risk their capital to help build the next wave of businesses that improve their corner of the world. i do find it a bit comical that investing has taken on a divine connotation, but that is a minor issue compared to the greatness that “angel” investing genuinely enables.

          • http://www.howardlindzon.com howardlindzon

            You are giving traders way too much credit young gun.

            The PUBLIC made these bubbles. The public are suckers. Traders die hooooorrrrible deatjs everyday.

            They are a cog/a good one, in the machine.

      • http://www.victusspiritus.com/ Mark Essel

        Hahaha, awesome enlightenment KM. I can count on your attention and presence to expose the darker but less observed perspective.

        This was like a truth brick going through Howard’s skylight as it casted loving rays on traders.
        Looking forward to Howard’s riposte.

      • http://www.ivanhoff.com ivanhoff

        What part of traders provide liquidity to the system you do not understand? Higher liquidity means less perceived risk for money lenders and entrepreneurs. Less perceived risk leads to lower required rate of return and lower cost borrowing, which means that more projects will be pursued and the economy will grow faster. Less liquidity leads to higher risk premium and higher risk premium often leads to less liquidity. If you need further explanation, let me know.

        • http://www.howardlindzon.com howardlindzon

          Well played.

          • http://www.kidmercuryblog.com kidmercury

            lol pfft….i just put his punk ass in his place….hope he walks away before i have to write a rap song humiliating him eternally via itunes….you know better than most i’m not joking (lol okay well i am, but the humor is, as always, in the truth)

          • http://www.howardlindzon.com howardlindzon

            GOOD STUFF YOUNG GUN

          • http://www.kidmercuryblog.com kidmercury

            lol young gun is a great moniker….going to have to incorporate that into my brand

        • http://www.kidmercuryblog.com kidmercury

          oh it’s on now…..ivanhoff vs kid mercury…..grab your popcorn folks! actually don’t, by the time you get back it’ll be done. :) let me drop the TKO:

          “traders provide liquidity”….lol. a nice idea, but more fiction than fact. the federal reserve creates liquidity when they create inflation. inflation has almost nothing good about it, but liquidity is one potentially good thing. traders, generally being too greedy to understand the big picture (after all that’s not their problem! [at least not until the bubble pops and the SEC puts restrictions on short selling....]), take this liquidity the fed created and inject it into markets. this results in overtrading, bubbles, and technical analysis being increasingly effective, often at the expense of fundamental analysis.

          you need to understand the connection between inflationary monetary policy, liquidity, asset bubbles, and active trading. it’s actually quite simple to understand, but if you need further explanation, let me know.

          • http://www.howardlindzon.com howardlindzon

            i think and hop ewe can all agree that the FED is killing us intentionally or not. we are living under a separate governemtn/experiment called the FED. it has gone really wrong and we are starting to see the downside.

          • http://www.ivanhoff.com ivanhoff

            I don’t dispute the role of low interest rates for risk appetite’s creation. Yes, too much money following too few projects will eventually result in inflation. Why would there be lack of projects in any economy? One simple reason would be an introduction of new taxes or an increase of the current taxes.
            Liquidity = the ability of an asset to be converted into cash quickly and without any price discount.
            Higher liquidity is reflected by tighter bid/ask spread. More people trading more often usually leads to tighter bid/ask spread, therefore improves liquidity. Every time when you put a limit order to buy or sell something, you are contributing to liquidity. Liquidity is a major element of an efficient capital market. An efficient capital market results in lower risk premium. Why? Because the exit is easier.
            I don’t care how low interest rates are. If the risk premium is high, the cost of financing any project will be high. How are projects financed? 2 ways – equity and debt. If the equity and debt markets are not liquid enough, the required risk premium will be higher.

          • http://www.kidmercuryblog.com kidmercury

            liquidity is not the only factor needed to create successful capital markets. let me know if you dispute that. one other factor needed to create successful capital markets is sound money. the federal reserve is a big part of the problem here. but it might behoove traders to stop beign ignorant and to undersatnd that when this excess money finds its way into the hands of traders, what they do with this excess money will impact the lives of many. will they choose to bid up the oil market? oh yes, i know, they are providing liquidity. but they are also helping to create higher prices. i understand traders may not care, because they are making profits; after all, those higher prices are going to someone’s wallet, right? right. traders can choose to be ignorant. or they can choose to have broader awareness of how their actions impact the world. if they want to claim nobility, i think they should choose the latter. ignorance is not noble. but again, i don’t hate traders, i am a trader, i just find it funny that my fellow gamblers are trying to act like their profession is noble….lol. honesty and awareness are noble. ignorance and gambling, not so much.

          • http://www.ivanhoff.com ivanhoff

            Different market participants and different elements dictate the price action at different time frames. Over a period of a few months irrationality might reigns, but in long-term perspective fundamentals matter. If the price of commodity A quadruples in 3 years from X dollars to 4X dollars, there is a reason behind that. That price didn’t go up because capital markets’ participants desired to see higher prices and wanted to destroy the world. It went up because enough market participants wanted to protect and/or increase their wealth and they figured out that it makes more sense to own commodity A instead of X dollars. Why would they reach such a conclusion? Various reasons, but mainly because the supply of X dollars is expected to increase much faster that the supply of commodity A and commodity A is important for people’ way of living. Don’t forget that everyone can be a market participant and gain/lose from the trade of any good. Behind every transaction, there is a buyer and there is a seller.

          • http://www.kidmercuryblog.com kidmercury

            your operating from the efficient market hypothesis and that type of crap, whereby the market is smart and reflect the real price of things….lol…..remarkably the real price of things is extremely volatile….and even more remarkable is that this volatility coincided with inflationary monetary policy and a rapid growth in active trading…..

            the market is not smart and not reflecting the real value of things. the market is a casino, which is what happens when you print too much money — speculation becomes a dominant force in the economy. i’d recommend looking into austrian business cycle theory, which while debatable and not perfect, is far more in line with how things actually work.

            speaking of which howard when are you going to roll out stocktwits learning center so that gamblers are aware of how the casino works (and so you can attract the lucrative newbie market and tap into organic search rankings)? you need any help with that holla at me. i mean if you don’t do it mahalo might try…..lol actually maybe it’s worth waiting for that, after all the bull market in laughs never ends

    • http://www.howardlindzon.com howardlindzon

      in a nutshell mark…liquidity. leverage from the top has given traders a bad name. some deserve it. Traders for the most part are entrepreneurs. They live and die from a profit and loss statement.

      They use their own momey. it goes wrong when they stop using their own money or that of angels. that’s where we have gotten with cheap governemtn money.

      leverage has killed the system. we need traders more than ever to help unlever this and create liquidity along the way.

      • http://www.victusspiritus.com/ Mark Essel

        I see liquidity has a value exchange service. But I imagine there also must be some positions that by their very nature are supported by not being liquid. A founder’s stock keeps them pushing to create value by growing the business, if he liquidates all his shares before a real liquidity event, it creates a questionable motivation scenario.

        Ok I understand the trader role much better now.

        Question: I got my uncle for secret santa (I mocked him and told him he better be good at Thanksgiving. Then he reversed it and showed that he had gotten me). He was (probably still is) a long time Cramer fan and he is heavily interested in following stocks. What’s an awesome present I can pick up for him for xmas?

        • http://www.howardlindzon.com howardlindzon

          i would get him a new monitor and show him how to use stocktwits. under
          $500 for a sick monitor and thats the refect gift for a stock lover.

        • http://www.kidmercuryblog.com kidmercury

          it is also worth considering the price the market has to pay for this liquidity. for instance, it probably creates value for you if a trusted person used their influence to talk abut how great mark is, and how we should all support mark in what he does. that’d be pretty cool, right? but imagine if they charged you $50 million for it. how cool would it be then? probably not so much.

          so what is the price of the liquidity the traders are providing? here it is:

          1. dot com bubble in the first part of the decade, which helped fuel a whole lot of waste
          2. housing bubble in the middle of the decade, which helped make rent and housing prices even higher
          3. oil bubble in first half of 2008 which pushed gas prices to $4.50+ in the USA, which is simply devastating
          4. what’s next? a carbon bubble? because of course carbon credits are such an important asset, and lord knows we need a liquid market for them!!! of course, this “liquidity” will bid up the price of carbon, which will increase energy costs for businesses and consumers…..i doubt the liquidity will be worth it. unless you’re a trader, of course.

  • http://www.victusspiritus.com/ Mark Essel

    I understand the awesome of Angels and Entrepreneurs, can you explain to a layperson the important role of the trader?

  • http://www.kidmercuryblog.com kidmercury

    there is no important role for traders, it does not serve society in any meaningful way. some folks will try to come up with some phony logic about how traders drive things to the “correct” price…..lol, i guess they are conveniently ignoring the past 10 years during which traders, particularly those of US markets, speculated to create bubbles that resulted in higher real world prices for consumers and wreaked havoc on the economy, which of course we are all paying the price for now. i don't blame traders for creating these bubbles (i am a trader and run a trading site for a living), as they are just taking advantage of the casino environment created by inflationary monetary policy, though i do find it entertaining when they act as though their profession is noble in some way. contemporary trading is just like gambling. i don't hate gamblers and encourage them to do what they like and be free — but i don't think they deserve a holiday or any kind of recognition for their “service to society,” lol. maybe they should try serving society first, then take a holiday afterwards.

    i also have a beef with the term “angel investors” and when these “angel investors” shorten their job title to just “angel.” lol, wtf, so ridiculous and pretentious. i'm going to start calling myself a “god entrepreneur.” just “god” for short. :)

    not hatin' on howard though, he seems like a good guy. plus he beefs with arrington and jdawg, that's always fun. :)

  • http://www.howardlindzon.com howardlindzon

    I will defend this in a bit. Let me digest the sunday attack :)

  • http://www.tradersmarts.blogspot.com/ TraderSmarts

    Great post! Bout time somebody recognizes the difference between a trader and an investment bank (we’ll what’s left of em). Pass this trader tax and put me out of business. Thanks Lindzon. I for one am with ya!

  • http://www.tradersmarts.blogspot.com/ TraderSmarts

    Great post! Bout time somebody recognizes the difference between a trader and an investment bank (we'll what's left of em). Pass this trader tax and put me out of business. Thanks Lindzon. I for one am with ya!

  • Anonymous

    We the people that trade for a living or for Institutions or Prop Firms, we make the markets possible and liquid.
    We the people of this great free enterprise system take the risk and rewards like an army of working ants with relatively little to gain but collectively building a market everyday so that Banks, Institutions,Ins Companies, HedgeFunds, foreign goverments can unload their contracts on us in the form of distribution.
    We the people as active traders declare one day as a special recognition to the value that we collectively represent to the worldwide markets.

  • Silversea

    We the people that trade for a living or for Institutions or Prop Firms, we make the markets possible and liquid.
    We the people of this great free enterprise system take the risk and rewards like an army of working ants with relatively little to gain but collectively building a market everyday so that Banks, Institutions,Ins Companies, HedgeFunds, foreign goverments can unload their contracts on us in the form of distribution.
    We the people as active traders declare one day as a special recognition to the value that we collectively represent to the worldwide markets.

  • http://twitter.com/howardlindzon howardlindzon

    ok kid…lookslike we will never agree on this but here goes.

    There are thousands of important roles for traders.

    FIRST – they are entrepreneurs as they live by what they kill and you can hate the playa's but it's misplaces. Almost all traders are disciplines and work within the rules. The cheats are not good traders, they are cheats. They are a product of a system and morality gone bad.

    Traders ARE good gamblers, but gamblers is a dumb activity and should bnot be compared with trading.

    Traders are not just stocks and bonds and commodities, its all goods. It's a service. They provide liquidity to markets and we neeeeeeed them. What we DON't need is our leaders of the big banks creating leverage vehicles for those traders. Leverage is a tactic and became a strategy. that's what needs to be taxed. that's like letting people consume steroids until they can break a 2 minute mile. it can happen, but no one needs it.

    wrt angels, who cares what they are called. I mean the risk takeers that back and entrepreneur out of their hard earned savings to help move ideas along. period.

    your beefs are fine, but this is a blog post and you are reading way too much into it. I like to keep things simple. traders, entrepreneurs and angels are great.

    go watch football and watch fred's back :)

  • http://www.aiki14.com aiki14

    Not sure I agree with the first part, so I guess this is phony logic, but I will point out that the stuff that traders didn't trade, the illiquid derivatives and swaps is a large part of the problem. The entities that deal in these things took traders out of the process and therefore hid the destructive force they held. Also it is worthy to note that some of us have been in this trading game longer than 10 yrs and were keeping things going when the monetary policy was very different, and the gambling mentality so prevalent today was less pronounced. I have no delusion of nobility, but I think there is more of a service to society in what we do than you give us credit for.
    As to “angel investors” I have never seen a business card with that on it, I have been an “angel investor” in that I have provided funding to start ups when the traditional lines of credit were unavailable to them, but my card reads Partner in an investment firm. The invocation of the term originates entirely with the recipient of the funding, not those who offer it.

    I am in favor of the holiday as Howard has proposed it, and when the real traders wash out the gamblers and the system reverts to the mean our value to society will be more obvious.

  • http://twitter.com/howardlindzon howardlindzon

    in a nutshell mark…liquidity. leverage from the top has given traders a bad name. some deserve it. Traders for the most part are entrepreneurs. They live and die from a profit and loss statement.

    They use their own momey. it goes wrong when they stop using their own money or that of angels. that's where we have gotten with cheap governemtn money.

    leverage has killed the system. we need traders more than ever to help unlever this and create liquidity along the way.

  • http://www.victusspiritus.com/ Mark Essel

    Hahaha, awesome enlightenment KM. I can count on your attention and presence to expose the darker but less observed perspective.

    This was like a truth brick going through Howard's skylight as it casted loving rays on traders.
    Looking forward to Howard's riposte.

  • http://www.victusspiritus.com/ Mark Essel

    Solid counter Howie. You do realize Kids over the top elbow off the top rope onto traders elicited some great info from yourself. That's comment gold in my book. Great value for my attention from both of you.

    Rationale debates that are hypercritical of positions really help outside folks understand better the forces at work.

    10/10 blogging!

  • http://tradersmarts.blogspot.com TraderSmarts

    “Traders for the most part are entrepreneurs. They live and die from a profit and loss statement.” – Howard Lindzon

    Enough said right there about traders. Now you all can argue about the other stuff :)

  • http://tradersmarts.blogspot.com TraderSmarts

    “in a nutshell mark…liquidity. leverage from the top has given traders a bad name. some deserve it. Traders for the most part are entrepreneurs. They live and die from a profit and loss statement.” – Howard Lindzon

    Enought said right there about traders. Now you all can argue about the other stuff :)

  • http://www.howardlindzon.com howardlindzon

    Amen

  • http://www.victusspiritus.com/ Mark Essel

    I see liquidity has a value exchange service. But I imagine there also must be some positions that by their very nature are supported by not being liquid. A founder's stock keeps them pushing to create value by growing the business, if he liquidates all his shares before a real liquidity event, it creates a questionable motivation scenario.

    Ok I understand the trader role much better now.

    Question: I got my uncle for secret santa (I mocked him and told him he better be good at Thanksgiving. Then he reversed it and showed that he had gotten me). He was (probably still is) a long time Cramer fan and he is heavily interested in following stocks. What's an awesome present I can pick up for him for xmas?

  • http://www.howardlindzon.com howardlindzon

    i would get him a new monitor and show him how to use stocktwits. under
    $500 for a sick monitor and thats the refect gift for a stock lover.

  • http://www.ivanhoff.com ivanhoff

    What part of traders provide liquidity to the system you do not understand? Higher liquidity means less perceived risk for money lenders and entrepreneurs. Less perceived risk leads to lower required rate of return and lower cost borrowing, which means that more projects will be pursued and the economy will grow faster. Less liquidity leads to higher risk premium and higher risk premium often leads to less liquidity. If you need further explanation, let me know.

  • http://www.howardlindzon.com howardlindzon

    Well played.

  • Guest

    awesome, wish it was a different day like tim too, won’t be in nyc early that week. i could see a funny wallstrip-like video for this mimicking the old bud light commercials – http://bit.ly/7vGcg0):

    “Howard Lindzon presents REAL MEN OF GENIUS….

    (Real men of genius)

    Today, we salute you Mr. Trader, Entrepreneur, and Angel…”

    • http://www.howardlindzon.com howardlindzon

      Like it. Has to be first biz day of new year.

  • http://twitter.com/sayemislam sayemislam

    awesome, wish it was a different day like tim too, won't be in nyc early that week. i could see a funny wallstrip-like video for this mimicking the old bud light commercials – http://bit.ly/7vGcg0):

    “Howard Lindzon presents REAL MEN OF GENIUS….

    (Real men of genius)

    Today, we salute you Mr. Trader, Entrepreneur, and Angel…”

  • http://www.howardlindzon.com howardlindzon

    Like it. Has to be first biz day of new year.

  • Pingback: Hot Links: The Pot and the Kettle The Reformed Broker

  • gregor.us

    Peter Theil makes the point that if the US is not producing a fast stream of new ideas that are worth investing in, then it’s no longer the US and no longer deserves a premium. I may talk about this tonight.

    G

    • http://www.howardlindzon.com howardlindzon

      I like it

  • gregor.us

    Peter Theil makes the point that if the US is not producing a fast stream of new ideas that are worth investing in, then it's no longer the US and no longer deserves a premium. I may talk about this tonight.

    G

  • http://www.howardlindzon.com howardlindzon

    I like it

  • http://www.kidmercuryblog.com kidmercury

    oh it's on now…..ivanhoff vs kid mercury…..grab your popcorn folks! actually don't, by the time you get back it'll be done. :) let me drop the TKO:

    “traders provide liquidity”….lol. a nice idea, but more fiction than fact. the federal reserve creates liquidity when they create inflation. inflation has almost nothing good about it, but liquidity is one potentially good thing. traders, generally being too greedy to understand the big picture (after all that's not their problem! [at least not until the bubble pops and the SEC puts restrictions on short selling....]), take this liquidity the fed created and inject it into markets. this results in overtrading, bubbles, and technical analysis being increasingly effective, often at the expense of fundamental analysis.

    you need to understand the connection between inflationary monetary policy, liquidity, asset bubbles, and active trading. it's actually quite simple to understand, but if you need further explanation, let me know.

  • http://www.kidmercuryblog.com kidmercury

    lol pfft….i just put his punk ass in his place….hope he walks away before i have to write a rap song humiliating him internally via itunes….you know better than most i'm not joking (lol okay well i am, but the humor is, as always, in the truth)

  • http://twitter.com/howardlindzon howardlindzon

    GOOD STUFF YOUNG GUN

  • http://twitter.com/howardlindzon howardlindzon

    i think and hop ewe can all agree that the FED is killing us intentionally or not. we are living under a separate governemtn/experiment called the FED. it has gone really wrong and we are starting to see the downside.

  • http://www.kidmercuryblog.com kidmercury

    as howard can tell you i hate the fed with a passion, people will be talking about the weather or baseball or whatever and i will find a way to ruin the conversation and make it about the fed and how awful the fed is and how much it is robbing us. so yes, the fed is the main reason for all these bubbles and the shameful disgrace that is the US financial markets. but traders are there, taking the bait the fed gives them to create the dot com bubble, the bubble that sent DJIA to 14,000 and oil to $150+, and even the current reflationary episode. it takes two to tango: the fed is definitely leading the dance, but the traders are all too willing to ignore that these bubbles, which they create and profit from with their trading activity, and which have come at the expense of a devalued dollar over the past decade, and thus the current wall st environment amounts to a transfer of wealth from dollar holders to equityholders/active traders.

    in all fairness, if your game goes back more than 10 years, if you are pre-greenspan, than yes you are from a different era, a more legitimate one. though as i noted i don't blame traders too much, everyone has to make a buck and i personally trade because i know if i don't i'll just get screwed over holding dollars. so i am not so much of a trader hater, i just think it's basically the same as gambling, but with much better odds than vegas gives you.

    with regards to angels, lol, no worries, i am just joking about that comment. :) i am passionate about real capitalism and admire investors like yourself who risk their capital to help build the next wave of businesses that improve their corner of the world. i do find it a bit comical that investing has taken on a divine connotation, but that is a minor issue compared to the greatness that “angel” investing genuinely enables.

  • http://www.howardlindzon.com howardlindzon

    You are giving traders way too much credit young gun.

    The PUBLIC made these bubbles. The public are suckers. Traders die hooooorrrrible deatjs everyday.

    They are a cog/a good one, in the machine.

  • http://www.kidmercuryblog.com kidmercury

    lol, thanks mark! elbow off the top rope is my trademark move. :)

    beefs in blog discussions have great value for all, no doubt.

  • http://www.ivanhoff.com ivanhoff

    I don’t dispute the role of low interest rates for risk appetite’s creation. Yes, too much money following too few projects will eventually result in inflation. Why would there be lack of projects in any economy? One simple reason would be an introduction of new taxes or an increase of the current taxes.
    Liquidity = the ability of an asset to be converted into cash quickly and without any price discount.
    Higher liquidity is reflected by tighter bid/ask spread. More people trading more often usually leads to tighter bid/ask spread, therefore improves liquidity. Every time when you put a limit order to buy or sell something, you are contributing to liquidity. Liquidity is a major element of an efficient capital market. An efficient capital market results in lower risk premium. Why? Because the exit is easier.
    I don’t care how low interest rates are. If the risk premium is high, the cost of financing any project will be high. How are projects financed? 2 ways – equity and debt. If the equity and debt markets are not liquid enough, the required risk premium will be higher.

  • http://www.kidmercuryblog.com kidmercury

    liquidity is not the only factor needed to create successful capital markets. let me know if you dispute that.

    one other factor needed to create successful capital markets is sound money. the federal reserve is a big part of the problem here.

    but it might behoove traders to stop beign ignorant and to undersatnd that when this excess money finds its way into the hands of traders, what they do with this excess money will impact the lives of many. will they choose to bid up the oil market? oh yes, i know, they are providing liquidity. but they are also helping to create higher prices. i understand traders may not care, because they are making profits; after all, those higher prices are going to someone's wallet, right? right.

    traders can choose to be ignorant. or they can choose to have broader awareness of how their actions impact the world. if they want to claim nobility, i think they should choose the latter. ignorance is not noble.

    but again, i don't hate traders, i am a trader, i just find it funny that my fellow gamblers are trying to act like their profession is noble….lol. honesty and awareness are noble. ignorance and gambling, not so much.

  • http://www.kidmercuryblog.com kidmercury

    it is also worth considering the price the market has to pay for this liquidity. for instance, it probably creates value for you if a trusted person used their influence to talk abut how great mark is, and how we should all support mark in what he does. that'd be pretty cool, right? but imagine if they charged you $50 million for it. how cool would it be then? probably not so much.

    so what is the price of the liquidity the traders are providing? here it is:

    1. dot com bubble in the first part of the decade, which helped fuel a whole lot of waste
    2. housing bubble in the middle of the decade, which helped make rent and housing prices even higher
    3. oil bubble in first half of 2008 which pushed gas prices to $4.50+ in the USA, which is simply devastating
    4. what's next? a carbon bubble? because of course carbon credits are such an important asset, and lord knows we need a liquid market for them!!! of course, this “liquidity” will bid up the price of carbon, which will increase energy costs for businesses and consumers…..i doubt the liquidity will be worth it. unless you're a trader, of course.

  • http://www.kidmercuryblog.com kidmercury

    lol young gun is a great moniker….going to have to incorporate that into my brand

  • http://twitter.com/PsycAndrew Andrew Ilardi

    Right on

  • http://twitter.com/PsycAndrew Andrew Ilardi

    Right on

  • http://www.ivanhoff.com ivanhoff

    Different market participants and different elements dictate the price action at different time frames. Over a period of a few months irrationality might reigns, but in long-term perspective fundamentals matter. If the price of commodity A quadruples in 3 years from X dollars to 4X dollars, there is a reason behind that. That price didn’t go up because capital markets’ participants desired to see higher prices and wanted to destroy the world. It went up because enough market participants wanted to protect and/or increase their wealth and they figured out that it makes more sense to own commodity A instead of X dollars. Why would they reach such a conclusion? Various reasons, but mainly because the supply of X dollars is expected to increase much faster that the supply of commodity A and commodity A is important for people’ way of living. Don’t forget that everyone can be a market participant and gain/lose from the trade of any good. Behind every transaction, there is a buyer and there is a seller.

  • http://www.kidmercuryblog.com kidmercury

    your operating from the efficient market hypothesis and that type of crap, whereby the market is smart and reflect the real price of things….lol…..remarkably the real price of things is extremely volatile….and even more remarkable is that this volatility coincided with inflationary monetary policy and a rapid growth in active trading…..

    the market is not smart and not reflecting the real value of things. the market is a casino, which is what happens when you print too much money — speculation becomes a dominant force in the economy. i'd recommend looking into austrian business cycle theory, which while debatable and not perfect, is far more in line with how things actually work.

    speaking of which howard when are you going to roll out stocktwits learning center so that gamblers are aware of how the casino works (and so you can attract the lucrative newbie market and tap into organic search rankings)? you need any help with that holla at me. i mean if you don't do it mahalo might try…..lol actually maybe it's worth waiting for that, after all the bull market in laughs never ends

  • http://www.tradewiser.com Blain Reinkensmeyer

    I second Tim’s notion!

  • http://www.stocktradingtogo.com StockTradingToGo

    I second Tim's notion!

  • http://www.ivanhoff.com ivanhoff

    Different market participants and different elements dictate the price action at different time frames. Over a period of a few months irrationality might reigns, but in long-term perspective fundamentals matter. If the price of commodity A quadruples in 3 years from X dollars to 4X dollars, there is a reason behind that. That price didn’t go up because capital markets’ participants desired to see higher prices and wanted to destroy the world. It went up because enough market participants wanted to protect and/or increase their wealth and they figured out that it makes more sense to own commodity A instead of X dollars. Why would they reach such a conclusion? Various reasons, but mainly because the supply of X dollars is expected to increase much faster that the supply of commodity A and commodity A is important for people’ way of living. Don’t forget that everyone can be a market participant and gain/lose from the trade of any good. Behind every transaction, there is a buyer and there is a seller.

  • http://www.kidmercuryblog.com kidmercury

    your operating from the efficient market hypothesis and that type of crap, whereby the market is smart and reflect the real price of things….lol…..remarkably the real price of things is extremely volatile….and even more remarkable is that this volatility coincided with inflationary monetary policy and a rapid growth in active trading…..

    the market is not smart and not reflecting the real value of things. the market is a casino, which is what happens when you print too much money — speculation becomes a dominant force in the economy. i'd recommend looking into austrian business cycle theory, which while debatable and not perfect, is far more in line with how things actually work.

    speaking of which howard when are you going to roll out stocktwits learning center so that gamblers are aware of how the casino works (and so you can attract the lucrative newbie market and tap into organic search rankings)? you need any help with that holla at me. i mean if you don't do it mahalo might try…..lol actually maybe it's worth waiting for that, after all the bull market in laughs never ends

  • http://www.stocktradingtogo.com StockTradingToGo

    I second Tim's notion!

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