Buyers, Meet Sellers
The nature of cooperation and the price point at which hands do shake
Joel Bowman, reckoning today from Buenos Aires, Argentina...
A quick public service announcement up top of today’s issue, Dear Reader, one that we hope will spare the human race an inordinate degree of unnecessary suffering and misery.
You’ve heard it said before... on the evening news, in an airport lounge, scrolling through your preferred iDevice on the long commute home...
No sooner has the stock market bell sounded than some cotton-brained sock puppet appears to deliver that hackneyed factoid:
“Well, looks like the sellers outnumbered the buyers today...”
It’s tantamount to those pithy post-game tropes: “We just kept moving the ball forward”... “The team really pulled together”... “All our hard work really paid off”...
...except for one thing: The buyers vs. sellers remark is untrue.
For one thing, there is no “versus” between the two camps. Quite the opposite. In fact, our convivial cooperatives only become “buyers” and “sellers,” by definition, when their interests align at a particular point of agreement... a point we call “price.”
Vexed beyond reason (can you tell?), your persnickety editor savored the opportunity to put this shameless rhetorical swindle to rest this week when we spoke with Chris Mayer, Bill Bonner’s long time friend and manager of the Woodlock House Family Capital Fund (which the pair co-founded).
Borrowing a snappy snippet from the paid only transcript of the event (full read available here), we present Chris’ patient response to our little bête noir...
Joel Bowman: [...] just off the top, while we are debunking some commonly misused nomenclature with regards to growth and value and whatnot, I saw another headline this morning, and I'm sure people see this or some version of this every day, and it is just a little pet peeve of mine. So, I would like you, with your authority, to debunk this. When the market goes down, there's always somebody saying that it's because, “Today, the sellers outnumber the buyers.”
Chris Mayer: Oh God, it's the worst. That's the worst.
Joel: Could you just get that out of the way for us, just so that we don't have to deal with that anymore. Ever.
Chris: It's very easy. For every buyer, there must be a seller. You cannot have buyers outnumber sellers, or sellers outnumber buyers. They match up exactly. Every single share bought has its share sold.
And there you have it, folks. Straight from Bill’s #1 money man... Sellers = buyers. Done. Finished. Quod erat demonstrandum.
Moving right along...
There was, of course, far more of genuine substance to the conversation than mere semantics. For one thing, Dan Denning was on hand to moderate proceedings and to put the tough questions to Chris... serious inquiries regarding prevailing macroeconomic forces, Fed policy projections and portfolio allocation strategies, to name but a few...
So too were our dear listeners up to task, quizzing Mr. Mayer on his thoughts about everything from inflation hedges to stock screens to real estate, gold, cryptos and plenty more besides...
If you’re interested in the unabridged, hour-long conversation, you can watch the entire event (on video), listen to it (audio) or even read it (transcript) by joining our paid members, right here...
And now for Bill Bonner’s missives from the past week...
The $64 Trillion Question
Our bet is that Fed economists are about to relearn another lesson – last rehearsed 50 years ago. In the early ‘70s, inflation rates were rising. Then falling. And then rising again.
Fools and Their Money
Yes, the Fed put itself in a vise. On one side is the interest rate suppression and money-printing that has paid the feds’ bills and made the rich richer. On the other side is the Main Street economy, which craves stability, steady prices and honest interest rates.
The Equality Myth
‘Equality’ doesn’t exist in nature. No two snowflakes are exactly alike. Nor are two people. And Thank God. Imagine if we were all tipped into a gray porridge of perpetual mediocrity! Distinctions are what we want… not equality.
The Color of Money
Huh? What gives? How come American whites discriminate so effectively against native born blacks, but not so much against foreign born blacks? How come they block the Black coaches but not the Black players?
16 Tons of Debt
We reported last week that inflation is costing the typical household around $300 a month extra, just to stay in the same place. Where does that money come from? Here’s part of it...
And finally…
Before we leave you to your Saturday, a special mention for our personal favorite reader comment of the week (thus far).
In response to Bill’s Tuesday missive, “Fools and Their Money,” Alfred O. generously improved our work by replying: “Headline should read, Fools and Our Money.”
Touché.
That’s all from us for today. Tune in tomorrow for your regular Sunday Sesh, where we’ll take a look at the origins and nature of value.
Until then...
Cheers,
Joel Bowman
Re Buyers and Sellers: (A "persnickety" point) Really isn't it the quantity of shares bought/sold that are equal not necessarily buyers and sellers - one buyer/seller can market a vastly different quantity of shares than the corresponding seller/buyers?
Does the “more buyers than sellers” term not mean that there are more people who want to buy than sell, and as price rises some of those buyers are left on the sideline, disappointed and unwilling to pay the higher price? Semantics, indeed… it’s a discussion I’ve had with my colleagues on the trading desk a number of times over the years.