Quote :

"Also, if the bid and ask aren't close, the specialist will ask or bid it out of his or her own book at least $0.01 higher than the bid or lower than the ask."

Can you elaborate on this?

11/28/2006 9:12:28 AM

Yeah, let me know what exactly I need to cover.

A specialist is basically the market maker in a specific security. If you go to the NYSE, you'll see a bunch of horseshoe shaped kiosks that trade specific securities. Each one has a specialist who keeps track of all limit and stop orders in his "specialist's book." Market orders come in at either the highest bid or the lowest ask, depending on if they are buy or sell orders. But sometimes no market orders are coming in, so you have just limits and stops in the book at different prices and volumes. In the case that he has people wanting to sell, but not any bidders at that price, he will bid from his own account one cent higher that the highest bid. On the other end, he'll bid 1 cent lower than the lowest ask, which narrows the spread between the bids and the asks.

Basically, he's willing to trade from his account on either side (buy or sell) in order to maintain the market and keep it moving. That's part of their job, and they usually do pretty well monetarily even though they don't choose when they buy or sell.

11/28/2006 9:58:26 AM

You covered what I wanted to know. Thanks.

11/28/2006 10:21:39 AM

No problem.

11/28/2006 10:30:52 AM

A large percentage of trades, even in NYSE listed names, do not go through the specialist. Large investment banks (Goldman, JPMorgan, UBS etc.) often find the other side of a trade with another client and cross the shares, collecting commision on both sides. Sending orders to the floor is usually a last resort these days.

Specialists make money by adjusting their markets.

Say market is .49 - .51
Someone lifts the offer (pays .51)
New market is .50 - .52
Next guy hits the bid (sells @ .50)

Specialist just made a penny times #shares. They do this all day long.

11/28/2006 10:35:41 AM

in timing your buys and sells:

http://tinyurl.com/yaqdk2

11/28/2006 10:39:57 AM

Well, you're right that most orders don't head for the floor the way they used to, which is why most trading is being pushed towards negotiated markets rather than auction markets.

But it is much easier to explain the work of specialists on the NYSE to someone who wants to know how prices are set than it is to explain SuperDot 250 (where most of OUR orders go through) or the ITS, which is what you're talking about with major investment brokers.

11/28/2006 11:00:33 AM

true true, not questioning what you said...just adding to it. you work as a trader?

11/28/2006 11:07:42 AM

No, actually I'm a financial consultant that happens to <3 the equity markets. Although I'm looking into a job as a fixed-income analyst.

I had to learn that crap for the Series 7 and 65 though.

11/28/2006 12:16:08 PM

Beginner question:

For those of us (me) who are just trying to get into this and get a feel for things, it seems like a good idea to go with an index fund or ETF index such as SPY. Reasons:

-~1k to invest to start off with (part time job, money saved sitting in money market account)
-beats on average ~80% of funds w/ 10%-12% return per year
-Low fees

any ideas/suggestions/pointers - this is from my very limited knowledge and things i have recently read up on

11/28/2006 1:59:48 PM

i'm a huge fan of ETFs - go to msnmoney.com or cbsmarketwatch and read up some free stuff on ETFs to get you started

11/28/2006 2:38:32 PM

ETFs and index funds are good for new investors (and older one's without the time to deal with security selection or management selection) but be a bit wary of this:

Quote :

"10%-12% return per year"

That's an annualized average over a long period of time. Don't think that you really get that each and every year.

11/28/2006 2:42:58 PM

dammnit - Cramer beat me to the punch on DG

i was going to buy some on the Bank of America analyst research, but he had to come on TV and talk about it...

i bought at 16.42 anyways -- hoping it gets bought out at 20

11/28/2006 2:59:09 PM

TIE is having a nice day, up 6%.

11/29/2006 11:34:02 AM

to hell with DG

i'm thinking about getting some ILMN and hedging it with AFFX

11/30/2006 3:47:15 PM

TIE is up over 10% since the close of Tuesday.

11/30/2006 3:52:42 PM

Is it time to sell TIE? My (small) portfolio is up 20% in 6 months.

[Edited on December 1, 2006 at 12:18 AM. Reason : k;l]

12/1/2006 12:16:01 AM

i'm also thinking about starting up my affair with CDE again

also looking at LEAP, GPRO and HOLX

12/1/2006 12:21:16 AM

anybody know of any local brokerage/financial advisory firms that are looking to hire an associate?

12/1/2006 1:37:02 AM

.

[Edited on December 1, 2006 at 1:52 AM. Reason : .]

12/1/2006 1:42:37 AM

you are beyond stupid....i have lost all of the respect that i never had for you to start with

12/1/2006 1:44:43 AM

.

[Edited on December 1, 2006 at 1:52 AM. Reason : .]

12/1/2006 1:46:17 AM

this is a dignified thread...almost...i don't want to ruin it...what do you guys think of UPS...they are a great growth stock that pays an acceptable dividend, but like i said they are a growth stock. Since I bought in August, i have gained 16% with them. Im not a big fan of the peny stocks...

12/1/2006 1:51:35 AM

damn, you got hockeydries mad, that's one of the most laid back kids i know

12/1/2006 9:26:09 AM

Please someone tell me what he said--he was too much of a wuss to leave it up there.
I want to see how stupid it was.

12/1/2006 11:27:07 AM

Likewise

12/1/2006 11:27:57 AM

Quote :

"Is it time to sell TIE?"

I've been selling calls on it at 30 over the past few months and have made some good $.

12/1/2006 12:00:58 PM

dumped all my SNMX and USU that had been collecting dust and got into LEAP

12/1/2006 12:22:16 PM

What's so good about LEAP?
Whew I'm down a bit today.

12/1/2006 12:44:11 PM

i wasn't mad man....just unemployed and had a few beers

12/1/2006 5:14:12 PM

You guys and your stocks. Don't any of you use a 401K for investing?

12/1/2006 6:01:43 PM

yeah hockydries seemed pretty laid back in class

he sat behind some dumbass that asked gay ass questions every class and he never even scoffed or called him a retard or hit him or nothing

12/1/2006 6:06:24 PM

i took a lot sometimes man...everytime it seemed like we were about to get out that dude had more questions that were either already explained or were so dumb that they did not need to be explained.

12/1/2006 7:13:05 PM

question about SIRI stock .. not to buy for a short term stock usually but a buy and hold (3-5 yrs) to hold? I think it will atleast triple in 5 yrs?

12/1/2006 8:07:55 PM

On what are you basing that assumption?

12/1/2006 8:15:47 PM

Like every other prediction in this thread, he make it up. The problem with a random walk that trends upwards is that you have slightly more than every other idiot off the street thinking he has some sekret trick or plan that can beat the market.

12/1/2006 9:11:33 PM

whats up guys. been a while..
stocks give more returns than 401k's and for mutual funds...they are for the ignorant and lazy, i produce more in one month than mutual funds do in a year....hell ima start my own fund

12/2/2006 4:29:20 PM

Quote :

"stocks give more returns than 401k's"

huh

12/2/2006 4:58:18 PM

Quote :

"stocks give more returns than 401k's and for mutual funds...they are for the ignorant and lazy"

I think that statement just gave me an anurism.

12/2/2006 6:16:25 PM

i think he meant to say

1. mutual funds and other 'buy and hold' vehicles are for those who don't have the talent or time, to buy and sell stocks actively and well enough, to generate signifcant rerturn

2. if done right, actively trading stocks can outperform the 'buy and hold' vehicles, and it has worked for him

12/3/2006 12:31:42 AM

Quote :

"What's so good about LEAP?"

i've been tracking analyst reports and broker activity. i'm trying to find stocks that will be pushed onto the public by big brokerage houses. so if i see Goldman and JPMorgan saying nice things about a stock, and then i find that those houses are making a market for the stock, i try to capture some of the up momentum.

chances are the strategy is going to blow up in my face. i tried a similar strategy when i was trying to trade around earnings announcements, and i got beatup then too. i guess i just learn the hard way.

12/3/2006 12:36:34 AM

Quote :

"2. if done right, actively trading stocks can outperform the 'buy and hold' vehicles, and it has worked for him"

It depends on how valuable your time is. Most individuals can get a better return by working a normal job. If you want to make more money, you are much better off doing something that will get you a raise/promotion/whatever. The return on time investment for a mutual fund, hence, is much better for someone who doesn't enjoy doing stock research or watching cnbc. For virtually no time invested, they are getting decent returns.


Actually, that raises a question: How much time do you all spend researching and trading stocks? Do you make more or less than your salary (~hourly rate) by trading stock?

12/3/2006 1:04:40 AM

I definately agree with you. I could most likely trade stocks daily, but I don't have nearly enough time to do so and I would prefer to spend the little free time I have doing other things.

12/3/2006 3:03:11 AM

like most people - i probably could not make a better living just trading stocks than i do at my day job - atleast not without some serious training

12/3/2006 12:59:09 PM

anyone use finance.google's portfolios?

12/4/2006 11:06:18 AM

Looking at it now. Doesn't seem that impressive. What features does it offer aside from being able to see your holdings and the individual change for the current day?

12/4/2006 2:18:47 PM

Google sucks balls in finance. They have a long way to go before getting close to Yahoo.

So if you want to track portfolios, I'd stick with yahoo!

12/4/2006 2:39:35 PM

for individual investors, actively trading is not superior after transaction costs

12/4/2006 5:55:37 PM

from this article

http://tinyurl.com/ydk3vk

Quote :

"Few money managers want to cash in their gains in December, as their clients would then have to pay taxes on those in April of next year. If they wait until January 1, taxes on those gains won't have to be paid until April 2008."

+

Quote :

""The market doesn't seem to care, even when we get bad economic data," Mendelsohn said. "I'm blown away by the power of this rally, in spite of the inverted yield curve and the economy deteriorating." I'm participating in this market but the higher we go, the worse the risk/reward ratio," said Mendelsohn. "This is a game of musical chairs. I'm telling clients that while it's good to maximize gains, make sure you have a chair and be ready to take money out quickly if things get a little iffy." "

makes me think we'll see a correction in the first half of next year, and maybe even the first quarter

12/5/2006 1:42:21 PM

...kind of like what we saw this may-july

12/5/2006 1:44:54 PM