Down goes the Dow

mark cashin wrote:

No you are wrong, because for every buyer of an investable asset there is a seller. Therefore, the transactions net. It is a myth you are welcome to believe in, but it is a myth.

gente, you want to jump in here?

I'm way over my head in these theoretical debates. but what the hey.

Common sense would have it that in March 2009, with markets crashed and people hiding under desks after having sold their stocks, there was more cash on the sidelines than in March 2000, when everyone and his second cousin owned stocks and were borrowing money to buy more.

I don't really see how it could be different. Your saying there was exactly no difference in cash on the sidelines in stock mania and stock crash...seems silly to me.

Athough I see the paradox you are explaining.

I have a hunch the answer is simple, but I don't know what it is right now.

The answer is simple, they are net transactions. Sure the price fluctuates. that is how people take a loss or a gain. A stock, bond or cash remains in that form unless an instrument is retired. The guy who sold in 2000 transaction to a buyer that received the same price, no different in 2009. The "cash on the sidelines" meme is another myth, just like stock valuations don't matter.

Who said stock valuations don't matter?

Pete Najarian.

Does he post here?

Yes, goes by Trews.

I've seen his posts, but never any that said valuations don't matter.

You need to watch Fast Money, you will get the real message.

I don't know what that is.

Google it, along with IPO.

Ok, I've got it now. Never watch it though.

Already know about IPOs.

Good, the other guy thinks there is something magic about IPOs. Magic for losing money if you bought SNAP.

I think his point was at money invested in an IPO is new money to the market.

Venture capital investors sold to IPO buyers, their cash is back on the sidelines.

No magic.

And where did their money come from. Go back far enough and you'll have to say "the sidelines".

Yes magical thinking can do wonders.

Ok, if that's what you want to rely on.

Nah, I leave that up to you and your bros.

Not me, bro.