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Why Big Money Is Still Big Money
If you Google, “What Is The Purpose Of The Stock Market”, you’ll get all kinds of answers. If you head to your nearest top-rated MBA shop you’ll get some more answers, of the highfalutin kind. Valuation mechanism, capital raising venue, something to do with patience and impatience, and blah. These answers are all wrong. The purpose of the stock market is to transfer money from Small Money to Big Money. For anyone reading this that is just starting out and is putting just a few dollars to work here or there, don’t take it personally. For Small Money encompasses not just the local retirees’ investment club but also a great many hedge funds and RIAs managing sums as small as $1bn or more. No, the real beneficiaries of securities markets are the Leviathans, the behemoths, the whale-di-tutti-whales. Here, for instance, is BlackRock BLK 0.00%↑ stock since inception.
That’s what Big Money looks like. Gets bigger in good times, and when bad times hit? Also gets bigger.
Markets like 2023 are great for Big Money.
H1 2023, a huge bull run that comes apparently out of nowhere (unless you were a paying subscriber here at Cestrian Market Insight, in which case you saw it coming from October/November 2022 and hopefully positioned accordingly), all the while retail and other forms of Small Money are being told to fear the Next Great Recession ergo to keep away from markets or sell stocks or whatnot.
July, a blow-off top.
August, right as Small Money is clamoring to get back into the market? Blammo. Big Money unloads on Small Money to bank some of that good free money built up since the October 2022 lows. Suckered again, grandma!
And now the narrative is bear once more. Nvidia is going to crater and the market is going to zero. The Fed will keep hiking and kill the economy. And a thousand other fearlets set free by the Bot-Industrial Complex to run amok all over your computer and inside your brain. Quick! Sell your stuff to Big Money!
This isn’t how we see it. We believe markets will be up strongly by year end. And our Premium and Pro subscribers can scroll down to see our outlook for each of the four major US equity indices, together with Ether and Bitcoin. Have at it folks!