Stupid Things Finance People Say | Hacker News Reader

Stupid Things Finance People Say

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32 pointsr0h1n13 comments

"More buyers than sellers."

Any two-sided market will have prevailing prices at certain volumes (even if internal to a dealer) that are not perfectly matched before the actual trade. Say, SPY at 180.5 X 1000 bid and 181 X 1500 Offer. If that goes on a lot (1000 vs 1500, etc), market makers will adjust prices to stay as even as possible.

What finance people mean, and this is how language works, 'More buyers than sellers [at the prevailing price]'. Good financial journalists are speaking to a sophisticated audience that understands basic market microstructure.

"More buyers than sellers."

This is the equivalent of saying someone has more mothers than fathers. There's one buyer and one seller for every trade. Every single one.

If John sells 1000 shares and Frank and Sam buy 500 shares each, how many buyers and how many sellers are there? Granted, that isn't the scenario envisioned by people that use the expression, but if you are going to write an article full of nitpicking...

Well.. John made two trades.. one to Frank, and one to Sam.. so I think the article's right (" There's one buyer and one seller for every trade. ").

The expression is normally used to comment on the overall market behavior for the day (or some other time frame), not a single transaction, so the whole "There's one buyer and one seller for every trade" thing is somewhat irrelevant (edit: what I'm trying to say here is that John shouldn't count as two people just because he is involved in two transactions since the statement applies to the aggregation of all transactions over a day or other time frame).

Also, from John's perspective it may look like a single trade (he won't know that a computer matched his sell with multiple buyers unless they buy at different prices).

Since I too enjoy nitpicking articles about nitpicking...

"Investors are fleeing the market."

Every stock is owned by someone all the time.

Sure, but the number of people that own stocks can decrease or increase. I don't have hard data, but I would bet that less people own stocks when they are low than when they are high, which would mean the phrase works as intended.

To me this meant "people who want to buy". It's easy for say 100 people to want to buy but no one to be willing to sell. It's of course a little silly as people would be likely to sell if buyers offered enough but I still think it's possible (at least in theory).

It is possible, yes, but it very rarely happens with publicly traded companies. It certainly happens much less than the phrase is used.

Typically people actually mean potential buyers and sellers. But, yes wrong when taken literally.

I must present:

Damn, It Feels Good to Be a Banker https://www.youtube.com/watch?v=ROlDmux7Tk4

Also a book from Leveraged Sellout with the same title: http://www.amazon.com/Damn-It-Feels-Good-Banker/dp/140130968...

Was I the only one that found this article annoying?

There /are/ some good examples there.. but generally this was an effort to intentionally misinterpret well understood industry terminology.

Financial journalists and pundits, to be specific. I liked these the best:

"Markets rose slightly today, no on knows why."

"Other than that Mrs. Lincoln, how was the play?"

This http://www.morningstar.com site is really interesting, That alone was worth the reading.

Brilliant, 90% used daily multiple times.

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