Thread: Where does the money come from?

OK. All my friends who aren't anywhere near the financial markets are asking how I think I will be making money in Foreign Exchange. They said (and they are right ) that money doesn't grow on trees. What I need is owned by someone. Why do they agree to donate it to me?
In stocks where profits come is evident. The stock market isn't a game because there is the maturation of the world economy and the business. There is money that flows into the system all the time and long duration, even if you'd both long and short positions, you'd find more money than you had in the beginning. Blend it with the leverage of those ocasional choices....
Now, concerning Foreign Exchange.
First, a little side remark. On not becoming Soros wealthy in this business all my plans are all based. I won't get to a trillion in my life neither I want, although I plan to get sufficient money to make myself happy to.
As it looks to me now I've got two choices where to take the money out of. First is playing against other players such as me and getting their money (that the 90% that do not succeed in Foreign Exchange ). I believe that I can outsmart lots of the people. Remember that we are expecting to make money. Are there enough suckers to make us rich?
Second way is following the path of some big banks, who actually move the prices. In a match of two giant sharks I could be a little fish that looks for the pieces of torn flesh that are falling all around (my apologies for its vivid description). Because I want a small sum this could be a legitimate egy. On the other hand, associations have the people on salary viewing the maret on any given moment and inventing algorithms for market motion predictions. Why don't they just take my money as well as that of banks? Could it be that there are numerous banks that are also suckers and do not have an efficient market following system or implementation system?
Even from a theoretical standpoint that I do not get it. The market should have a tendency to perfection. I.e. it ought to be totally unpredictible. Can we earn money?

What about you personally? How can you imagine to yourselves the backyard with money trees in Foreign Exchange?

....just a notion . . .when u have a charge in lets say YENS, im sure the bank will hedge your total ammount with the euros...

10 k euros in Yens is currently XYZ yens
the bank should hedge and will buy 10k eur/jpy to get xy years,. . .am I correct?

Originally Posted by ;

I assume that stock prices are set by demand and supply based on the performance of a business. Likewise, a company's assets have value based on demand and supply out of the stock market. Chapter 7 illues my point. The performance of the company and the net assets determine price. Can I not say as much? If you kept silly statements because I think I have said anything but that in my last article, I'm not certain where I indied anything I would love it.

Let me reiterate my point. You contended that in some hypothetical case in which capital is taken out of the market, the underlying assets will decline to zero. You didn't specify the conditions of this occurring, such as Chapter 7 bankruptcy. You said that the decline of these underlying assets (caused by removal of investment capital) to zero proves that it's a zero sum game. I disagree, because the business is the underlying asset and it will be worth something higher than zero if a share of its stock is equal to zero from owning a stock because you'll die.

If you would like to go over realistic situations such as Chapter 7, then bring up that if seeking to demone your point. The passing in zero need situations that are assumed and a moment aren't working for me.

OK, rather than me providing examples and explinations, lets have you describe the calculation utilized to discover the intrinsic worth of a stock and operate from that point. What is say Apple Computer's stock's intrinsic value. They've no debt so it ought to be a fairly straightforward company to test...

Originally Posted by ;

It's impacted when the stocks are perceived as using a higher value and people are willing to pay more for them. An sale of stock does not remove money from the market cap because someone else put the same amount of money in.

But when you sell a stock, someone buys it. Somebody else puts back in the money you take out.

These are the key factors.

First underlined: Should they perceive the stocks are worth more, but do do not increase the amount of money pursuing the existing stocks, the value will not increase. The deal price can shoot up $100, but until a bid hits it, it is not a price. If somone hit the deal, they'd be adding that $100 into the market cap. In the event the seller hit a bid $100 lower then the price, that will be removed from the market cap. It's precisely exactly although All these are numbers. This is the mechanisms of price discovery.

Second underlined: True enough, but only when they agree to transact at the median current price. Because this does not occur (as outlined above), you're either increasing or decreasing the market cap by half of the spread for each share you agree to transact. The new market cap is calculated and the stocks are valued.

Originally Posted by ;

OK, instead of me giving examples and explinations, lets have you explain the calculation used to detect the intrinsic value of an inventory and operate from there. What is the intrinsic value of say Apple Computer's stock. They have no debt so it ought to be a pretty simple organization to test...

I do not need to provide a calculation, that's not crucial to validate what I'm saying. You claimed this

Originally Posted by ;

I repeat ANY market where an extraction of the currently invested capital would drive the value of the underlying assets to zero is a zero sum game.

You created this assertion and the only way that this assertion is right is if you refuse that companies have any value outside of the stock market. It's not necessary for me to figure out the value, it is necessary to accept or deny the value as existing.

Originally Posted by ;

I do not need to provide a calculation, that's not necessary to confirm what I am saying. You argued this

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You made this assertion and the only way this assertion is right is if you refuse that companies have any value outside of the stock market. It's not necessary for me to calculate the value, it's necessary to accept or deny the worth.

I am not saying companys do not have worth, I am saying that the stock price is only conceptually related to the company. Unless or until a calculation could be proven that directly equates the value of a business to the market capitalization of a stock, they're two different subjects.

Originally Posted by ;

horseshit

Forex IS a zero sum game. All markets are zero sum. A number of them have a method of price discovery.



Borrowers print money, not governments. Should you dislike fiat currencies, cease taking out loans.

Today Darkstar, put down Keynes and take three steps back... you are among friends here; no need to curse. And do not leave now -- you are a worthy and intelligent adversary.

Help me out on this. I did a bad job of describing myself. First, I do not recall anyone saying governments print money. Their central banks, not the authorities themselves, do control the money supply, and somewhat so the currency is fiat, whether anybody likes it or not. I never said it was good or bad, it just is.

Secondly, I do not believe that borrowers print money. They participate in the expansion in money by depositing financing at a reserve bank, but the expansion is more the purpose of the regulator of the reserve percentage compared to the borrower. The borrower is passive in this whole procedure. Joe six-pack depositing a home-improvement loan likely has no idea he's expanding a monetary aggregate, so his role is more passive. The central bank plays a more active part, because they set the degree of the reserve percentage, hence the quantity of the expansion. I will bet we are in agreement here I just gave a slipshod explanation last time.

But please explain how, in a dynamic supply, an exchange is necessarily a zero-sum game? Particularly when just a portion of the swimming pool is really up for exchange against another currency? The majority of the currency in a market is for purchasing goods and services. Unless people are out there bartering using GM stocks A county's money supply is not really analogous to the shares of stock in a company. Please explain this. You likely know something I do.

Originally Posted by ;

Thanks for your comment DS, yes I understand that all are eager to play and are playing consciously. But if you're a boxer and a one which you hurt and can hit somebody, all are prepared to engage thats not a street fight but the problem stays.

Imho playing is not immoral and certainly occasionally its a kind of service to hedgers and banks. On the other hand I see a pictore of a buddy of mine who lost 8 lately, yes he is aware person (I believe ) and I'm not accountable for his him and loss.

Perhaps my problem is of plogical nature, I'll attempt to think about it. Any comments welcome.

You dont need to consider the profits in forex for a loss to everyone else.
Let's say you plan to market your long position. The other side would buy your place to procure his profits from a brief position.

If you're too concerned about hurting others (even if that's not true ) you cannot live within this world. If a business is owned by you, your business success may kill other competitors, driving them. They should feed their children too?
In the event that you got a project, your success is a failure to other 9 candidates. A number of them might not have money to eat two times a day.

Hope that helps pal.

Originally Posted by ;

Now, put down Keynes and take three steps back... you are among friends here; no desire to curse. And don't leave you are a intelligent and worthy adversary.

Help me out on this. I probably did a lousy job of explaining myself. First, I don't recall anyone saying governments print money. Their central banks, not the authorities themselves, do control the money supply, and somewhat so the currency is so fiat, whether anybody likes it or not. I never mentioned it was good or bad, it simply is.

Secondly, I don't believe that borrowers print money. They take part in the expansion in money by depositing financing in a reserve bank, but the expansion is more the function of the regulator of this reserve fraction than the borrower. The borrower is passive in this procedure. Joe six-pack depositing a home-improvement loan has no idea he's expanding a monetary aggregate, so his role is more passive. The central bank plays a part, since they establish the level of this reserve fraction the quantity of the monetary expansion. I will bet we're in agreement heremaybe I gave time to a excuse.

But finally, please clarify how, in a dynamic source, an exchange is always a zero-sum game? Especially when a portion of the pool is up for exchange against another currency? The majority of the currency within an economy is for purchasing services and goods. Unless individuals are out there bartering for groceries and gas using GM shares A county's money supply isn't really analogous to the shares of stock in a corporation. Please clarify this. You probably know something that I do.

I am not angry. I love the discussion. My apologies if it came off that way.

You can not have fractional reserve banking without loaning out the non-fractional component of the reserves. The moneysupply doesn't increase before a bank loans. It is the loaning process that creates the artificial asset on the banks balance sheet (although it simultaneousley resides on the depositors balance sheet) which is finally included in the monetary aggregate calculations. I posted a more thorough explination of fractional reserve banking mechanisms a while ago, but it seems to have disappeared.

It can just be true that Joe sixpack has no clue what he's doing when he borrows this money, but it doesn't excuse him from the duty. I am fairly sure were both on precisely the same page with this. Our difference is simply semantics.

I am not sure what your suggesting in the zero amount portion.

Originally Posted by ;

I am not angry. I love the discussion. My apologies if it came off like that.

I am not sure what your suggesting at the zero sum portion.

Well, not only are you intelligent, but you are a gentleman, too.

My whole theory about forex not being a zero-sum-game is because it differs in nature from stocks (or futures), that has a fairly static amount, and a particular purpose. If there are, by way of instance, 500,000 outstanding shares of Widgets Inc., that is not likely to change, unless a inventory buy-back or a new dilemma occurs; either is uncommon and also subject to a lot of prep beforehand.

Since the amount of money supply varies, and only part of it is for trade against other currencies, and is valued by multiple factors, it can be traded without one person shedding. If I win, it may be achieved without the person on the other side losing, because there is multiple uses for the currency (whereas there is not in shares ), and there is an ever-expanding pool of money (again, not in a stock).

Example: I money from my place at a higher price than I purchased it last week. Another buys it (of course ), however, the currency appreciates due to the county's productivity gains released the next week. He also realiizes a profit. The Fed desires to intensify the small boom, so it injects a little bit of money into the money supply by buying debt names (open market operations). Everyone wins.

Today, if I am in error, I need to understand, because I appreciate clarity over being right. Thanks.