Competitive Juices FlowingIt's important to understand who your opponents are on the field of battle. Sports and war metaphors abound, because they are consistent with what you are going up against. Yes, you are up against Mr. Market, but your rivals are also other people buying and selling stocks. They, too, are looking to produce positive returns.
Watch a pro football game, and it's obvious the guys on the field are far faster, stronger and more willing to bear and inflict pain than you are. Surely you would say, 'I don't want to play against those guys!' Well, 90% of stock market volume is done by institutions, and half of that is done by the world's 50 largest investment firms, deeply committed, vastly well prepared -- the smartest sons of bitches in the world working their tails off all day long. You know what? I don't want to play against those guys either.That's a brutal and, in my opinion, absolutely spot-on observation. The institutions Ellis refers to are mutual funds, hedge funds, charitable trusts, insiders, program traders -- and all of their professional traders and portfolio managers.