The Big Guys

You don’t have to be a big player to understand their motives and actions. You just need to put yourself in their shoes.

The big players consist of an exclusive club of wealthy individuals who are born rich or self-made billionaires, major banks, investment banks, various investment funds, brokerage companies, venture capitalists, and all kinds of money launderers. Do you want to know who are the big players of a given stock? Ask the Board of Directors of the company. Whether they want to tell you is a separate matter.

Since there are thousands of public companies out there, the big players must focus their firepower in a short list of companies that they can manage. These are known as their own territories. When territories overlap, the big players consult and conspire together. Otherwise, they have more freedom of action. The overriding objective is to profit at the expense of the small guys, not any member of the exclusive club for fear of retaliation. The big players don’t want to step on each others’ toes, or negate each others’ schemes.

The banks and brokerage companies possess something that the other big guys don’t: They know all about your private trading accounts. They know how much money you have, how much you have borrowed on margin, how much short sales you have made, when will your options expire, and what price levels you want to buy or sell as specified in your limit orders. How can you win if your opponents know everything about you?

The banks and mortgage companies are forbidden by law to divulge private account information. But that does not prevent them from aggregating all the data regarding their account holders. Also, it does not prevent them from sharing or selling the aggregate data. If they share this data, they will know for example how much short sales have been made by all small players for a given stock and at what prices. They can easily make the short sellers lose by pushing up the price of that stock. They can do all kinds of other things, too.

To shield their identities, the big players do not buy or sell in their own names. They employ special companies or agents to trade for them on a daily basis. They may do share exchanges or other back room deals outside of the stock market.

The lead-time of stock price ahead of company performance by several months shows that the big players have access to insider information.

Do you think big players read the news or analyses before going out to buy or sell just like you? If they do, they are no big players. Big players make news and make analyses for you to read.

Big players practice the age-old game of buy low and sell high. In the stock market, the game involves more sophistication: Buy panic sales by small guys, push up the price, seduce public participation, short sell, unload, and depress. Then come back in a few months to repeat the cycle again. Or switch to another company stock.

People work for the sources of their paychecks. When an analyst works in an investment firm owned or controlled by a big player, can’t you tell for whom the analyst is working?

When an investment firm controlled by a big player operates a mutual fund, can’t you tell for whose interest the fund is serving? Remember the stock market is a zero-sum game.