Wednesday, August 23, 2006

Markets and Market Makers

When stallholders display their produce in a market they use several ruses
to tempt you to buy say their fruit and veg. Their displays can be brilliantly
beautiful; their prices can be adjusted to be cheaper than the stall down the road,
or Tescos. The stall holder's income is dependent on the ruses working.

My plan at present is to save for the two times a year that I need to pay
Gordon Brown by buying a few shares rather than leaving it to earn the paltry
interest the banks deign to pay their customers. Putting this plan into effect
brings me into online
contact with the Market Makers (MMs) at the London Stock Exchange.

They earn rather more dosh than our local Pimlico produce stall holders - I assume -
but their ruses are not much different.
A post on the Sharecrazy bulletin board
earlier today (mine!) illustrates how one of their ruses worked for
share buyers in the Blackrock Oil company:


"MMs still play games:
I bought some BLR earlier at 1.08 when the bid had
fallen 6%. Published offer at the time
was 1.15p MMs pushed the bid down again to 10% with
published offer still 1.15p so
naturally I assumed actual offer buy price
would be cheaper too. Not a bit of it - a couple of dummy
buys then both gave 1.12p :shocked:
PIs need to be wary of such games :p"

What all that means is that the MMS showed a 10% fall in their price
for the Blackrock Oil shares (BLR). This tempted buyers in at the apparently
cheap price. The reality is that the 10% fall affected only the price to
sell the shares at not to buy them. Once you had bought at what you though
would be the cheap
price you would be bound to make a loss on them if you tried
to sell in a hurry.
Meanwhile the MMS had their profit booked if not
banked.

Still shares investing these days is almost fun especially with the masses of assistance
both technical and personal with bulletin board poster communities,
available from sites such as Sharecrazy.

1 comment:

  1. Having used Black Rock Oil
    (LSE: BLR) as an example of the games market makers can play
    with share prices it is ironic to see that rumours are now abounding about whether the company is about to hit oil/gas.

    ReplyDelete

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