WHO? moves the markets?

[imoldernu]

Probably the most naive question to be asked. I am probably the only one on this forum who doesn't know. I don't deal in the market, so don't know what happens when a person buys and sells.

Hard to understand, when everybody else already knows how the buying selling works. I couldn't find a simple primer on the subject.

The simple questions:
Who do "you" talk to or call or email or in some way connect with?
When you give your buy/sell order... what does the person or business on the other end do with it?
Does your single order go directly to the endpoint, or is it held or merged with other persons' orders. Like... when I am looking at the live market statistics, does your order show up immediately... (as in one minute?) or does the order go in with others. In other words, If you are actively buying or selling in a rapid up/down situation, could your asset share rise or fall based on another individual's buy/sell?

Where do the mutual funds come in, and how do they buy/sell? Who makes the decisions?

If Warren Buffet happens to sell a large block of stock when you have placed a buy order, and the stock drops drastically, are you stuck with your buy at the high price?

I guess it comes down to market timing, but how does the little guy fit in?

Suggestions for a simple website for a simple person?

 

[imoldernu]

So... here's the kind of question that I wonder about.

I have 100 shares of Allstate that I bought bought at $15 a long time ago. The current price ranges around $85. $!500 then, $8500 now. In the current up/down market, how do I take my money out? Do I decide on an amount, and tell the broker? Let's say sell at $85. When does that sell take place? What happens by the time the trade is made? Suppose the market price goes up to $95 in the next five minutes? ... or down to $75.

 

[njhowie]

So... here's the kind of question that I wonder about.

I have 100 shares of Allstate that I bought bought at $15 a long time ago. The current price ranges around $85. $!500 then, $8500 now. In the current up/down market, how do I take my money out? Do I decide on an amount, and tell the broker? Let's say sell at $85. When does that sell take place? What happens by the time the trade is made? Suppose the market price goes up to $95 in the next five minutes? ... or down to $75.

Well, this is less involved than your original post.

Most folks place their brokerage orders online these days, either through the brokers app or website. If you like, you can still pick up the phone and place the trade with a real human, but the broker will charge (a lot) extra for that.

To sell your shares, you indicate:

1. That you want to sell
2. How many shares
3. Either a market order or a limit order. Market means sell immediately regardless of price. Limit means sell at no less than the price you indicate.

With a widely held, extremely liquid stock like Allstate, you could place a market order and be confident that you'll get whatever the current bid is.

If you place a market order and the price moves violently before your order is executed, you get what you get. The order usually executes in fractions of a second from when you (or the broker) hits the sell button so it is extremely unlikely the price will move so quickly. Placing a limit order will guarantee you of the price you get, though it may not execute immediately or at all if your limit price is above where the stock is currently trading.

 

[NYEXPAT]

If it is a "market order" it sells in milliseconds at the "bid" price. If it is a Limit order at $85 it will not sell until that price is reached, if the price is higher by the time your order hits the market, you will recieve a higher price.

 

[LOL!]

There is a national list of orders that any broker or computer can look at. When I submit an order on my computer, it just goes instantly (not a minute later, but instantly) into the list for everybody to see. I can see it, too. (OK, sometimes the brokerage may not put it into the list, but just execute the order in house if the price is better than what is already in the list.)

My orders are separately listed and not aggregated with anybody else's. If someone wants to transact more shares than my order (or if my order is more shares than the individually listed orders), then the execution gobbles up enough of the listed orders to complete the transaction.

Your broker has a simple web site for a simple person, but your broker may also have an alternate web page for the less simple person.

 

[LOL!]

There is a Bogleheads thread with screen captures of some trade execution details at various times. I have found it instructive, but many people will not because it does have some esoteric info. It has busted some myths for me.

https://www.bogleheads.org/forum/viewtopic.php?t=165732

 

[Totoro]

Imagine before the web. You want to sell. Where do you go if you don't know a buyer? Enter the middleman: a broker and/or the stock exchange.

He writes down what you want to do: how much, how long the order is valid, any other circumstances that need to be met. That order sits in his book. The broker has the power you gave him to do a legally binding transaction once he finds a suitable buyer. He may trot over and meet with other brokers, or go to the exchange.

Once a buyer arrives that matches your criteria, the broker executes the transaction.

Now add the internet: nothing changes. The broker is still there, the exchange too.

That much you probably already knew. Now the tricky part enters when there are multiple options. If order A can be matched with order B or C, who goes first? The truth is that it varies across brokers and exchanges. Some have a 'first in first out rule', some have 'full match first' rule, etc .. rather controversial is matching by the broker internally or with preferential clients first (dark pools).

In fast shifting markets this can all become quite tricky, and there's an advantage in being as close as you can to the latest status of the order book. Which is why flash traders are shelving out millions of dollars to be as close as possible with fast connections to the exchange.


Sometimes big institutions trade blocks with each other directly to avoid some of the issues. Perfectly legal.


Hope it helps.

 

[imoldernu]

Am feeling better about not knowing this stuff. It's not simple. I even read through most of the Bogleheads topic, to see just how very complex this can be.
Looks like my future as an investor will have to be in another life.

Appreciate the education... Thank you all.

 

[redduck]

So... here's the kind of question that I wonder about.

I have 100 shares of Allstate that I bought bought at $15 a long time ago. The current price ranges around $85. $!500 then, $8500 now. In the current up/down market, how do I take my money out? Do I decide on an amount, and tell the broker? Let's say sell at $85. When does that sell take place? What happens by the time the trade is made? Suppose the market price goes up to $95 in the next five minutes? ... or down to $75.

You might want to call your broker and ask about the fees for buying/selling on-line (i.e. making the trade yourself) vs. having the broker buy/sell as per your instructions. If your stocks are being held at a large firm (e.g.Vanguard, Schwab, Fidelity), you can ask the broker to walk you through the transaction while you make the trade). I've never been charged the broker's fee when asking for this kind of help. (You might get this help at no charge at any size brokerage).

Ask your broker how long it takes for a trade to be executed. It should take less than a second if you are selling a large company like Allstate. So, if it's selling at $85.10 cents when you (or your broker) hits the sell button, you should get extremely close to the $85.10 (within pennies close).

If you want to sell at $85.00 and no less, you use a limit order declaring you won't sell for less than $85.00 As to the number of shares you sell, that's up to you, you can plug the number into the sell box or tell your broker. (Don't try to sell more shares than you actually own).

One other thing: in the last year or so, I've had someone look over my shoulder when I make a buy or sell to make sure that I'm doing it all correctly. (Just a little insurance).

 

[ERD50]

Am feeling better about not knowing this stuff. It's not simple. I even read through most of the Bogleheads topic, to see just how very complex this can be.
Looks like my future as an investor will have to be in another life.

Appreciate the education... Thank you all.

That depends on your viewpoint. Pretty much anything can be looked at as being simple, or being complex.

A stock transaction is simple, a buyer and seller agree to a price and transact. Simple.


But how about a pencil? That seems simple, so simple that we take them for granted, hardly give them a thought. You are probably familiar with the writing "I, Pencil"?

https://en.wikipedia.org/wiki/I,_Pencil

An excerpt:

My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon.

The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces. People prefer that I look pretty, not a pallid white.

... each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop—a lead sandwich, so to speak.

My “lead” itself—it contains no lead at all—is complex. The graphite is mined in Ceylon [Sri Lanka]. .... The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process.

.. cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.

My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer?

My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain.

Then there’s my crowning glory, inelegantly referred to in the trade as “the plug,” the part man uses to erase the errors he makes with me. An ingredient called “factice” is what does the erasing.

It is a rubber-like product made by reacting rapeseed oil from the Dutch East Indies [Indonesia] with sulfur chloride. .... Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.

Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?

Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others. .... There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field—paraffin being a by-product of petroleum.

Whew -the stock market seems simple in comparison to a pencil!


-ERD50

 

[MRG]

That depends on your viewpoint. Pretty much anything can be looked at as being simple, or being complex.

A stock transaction is simple, a buyer and seller agree to a price and transact. Simple.


But how about a pencil? That seems simple, so simple that we take them for granted, hardly give them a thought. You are probably familiar with the writing "I, Pencil"?

https://en.wikipedia.org/wiki/I,_Pencil

An excerpt:

Whew -the stock market seems simple in comparison to a pencil!


-ERD50

Thanks for posting this. I had no idea how pencils were made. Not unusual except I spent 10 years logging and in sawmills. Thought I had seen everything. [emoji1]

Now on to stock distributions.

 

[Totoro]

The aluminum can blew me away a year or so ago:

500 billion cans a year ..

 

[FireFool]

I suspect imoldernu has actual stock certificates, so the comments regarding on-line trading, while reflective of today's practices, may require a first step of getting the certificates into an online brokerage account. I also have a few share certificates that were issued pre-internet days that I want to clean-up and roll into my on-line brokerage account. Can anyone share any experiences/learnings around the process of getting those certificates transferred, particularly to either Fidelity (where the bulk of my assets are) or Vanguard?

 

[RobbieB]

I just walked into a brick and mortar office and did it there.

 

[ERD50]

I suspect imoldernu has actual stock certificates, so the comments regarding on-line trading, while reflective of today's practices, may require a first step of getting the certificates into an online brokerage account. I also have a few share certificates that were issued pre-internet days that I want to clean-up and roll into my on-line brokerage account. Can anyone share any experiences/learnings around the process of getting those certificates transferred, particularly to either Fidelity (where the bulk of my assets are) or Vanguard?

I just walked into a brick and mortar office and did it there.

imoldernu, if you do have actual stock certificates, please do get these converted to a brokerage, soon. I helped handle this for my wife and MIL, after FIL passed. But it will be much easier if you do it while you are able.

We went to the local B&M Fidelity office, they were very helpful, but I had done a lot of upfront work. IIRC, I had to get to each of the 'transfer agents' that had the record of the stock ownership (there were two different ones I think), and get them the forms to change ownership to his tax EIN in place of SS#, and then get that to Fidelity, and they had to do a medallion signature, etc.

Would have been far easier to have done this a few years earlier while he was of sound mind. Just make sure they are titled properly, with trust ID if they are supposed to be in a trust.

-ERD50