InvestingSuccess

The other day I was searching through the available books from my local Library. I spotted one called Making It In The Market – so I ordered it in.

Turns out the book was written in 1975 by Richard Ney who was a financial advisor in New York. He did a few appearances in Hollywood movies, which put him in close contact with some “monied” people.

In his book he makes the claim that the equity market is dominated by market makers who are tasked with ensuring orderly trading in stocks. Each market maker is assigned a basket of stocks to supervise. They are also free to use their own money to amass positions in the stocks they manage. There is an unwritten rule that says market makers will always collaborate together to either give the overall market an uptrend or a downtrend. An individual market maker will never run against the herd, so to speak.

He further goes on to reveal that a market maker holding shares in Company ‘A’ will buy more shares and cause the price to move up. This will grab media attention. People will read about the stock move in the media and call their broker to place a buy order. Through it all, the market maker is in control. Once he has sold off his position to hungry retail investors seeking to get rich, the price trend of the stock will have no more support and price will drop.

Ney wraps up the book with a detailed explanation of 3 lines that should be sketched on monthly price charts. The angles defined by these lines are key to understanding future trends.

All in all, a very revealing book. If your local Library has it (or can get it on an inter-library loan) I suggest taking the time to read it.