Markets are no imperfect, smart traders make to profit!

Submitted by sudhir.panda on Fri, 2009-10-02 22:42

Financial imperfections can alter the efficiency of economies and cause unintended effects on markets. With so much market distortions, the interaction between policies and institutions is a critical aspect, which are often ignored by many leaders with vested interest and push the common man to face the disaster. The truth is, markets are no imperfect, some smart traders' deeds make them so. The confusion created in the process is much lucrative for them to profit and hence they can afford to ignore ethics and preach management, efficiency, globalization, (ex-) inclusive growth, capitalism, ROI and many such BIG words.

The employees and senior management of the world's most profitable and powerful investment bank of 1980's; Salomon brothers had played Lair's poker - compare the game of lair's poker with trading. Is this smart risk? Do I feel lucky? How cunning is my opponent? Does he have any idea what he is doing? If not then how do I exploit his ignorance? If he bids high, is he bluffing or does he actually holds a strong hand? Each player seeks weakness, predictability and pattern in the other and seeks to avoid it in himself.

In web of trading the smartest is paid twice that of a professor of London School of Economics who is in peak of his career. First lesson in training programs for such smarties is that there are always fools in the market. As investment guru Warren Buffet puts it “Any player unaware of fools in the market probably is the fool in the market”. In 1979 Paul Volker announced that the money supply will remain fixed and interest rate would fluctuate. There began the golden age of Bond market. Overnight the bond market has transformed from backwater into a casino, and so remains many aspects of trading.

The incentives for selfish wrong-doing in markets exceeds playing ethical ideas for doing good for all. Normal traders and salesman are not paid on par for the profits they brought, public and private institutions has became a kind of nursery for producing smart traders for the market. Not only on Stock Trading Floors, you can find these smarties in every walk of life. The message is clear,” you work for profit at any cost, and WE (means smarties) pay you the incentive” - We will also do whatever it takes to shield you. Heck with rules, regulations, humanity and ethics!

Ref. Liar'S Poker

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