farewell letter from hedge fund manager

[JakeMartinez]

Golden Boy, unless you want to throw your money to the wind, an investor is supposed to be assuming the stock price will go up (which is determined by the demand for the stock, not necessarily by what the company is doing). Short selling is the only way to make money on buying high and selling low.

[maladroit]

"For the most part, firms purchase futures contracts to stabilize their input costs at future times"

- that type of futures deal is part of legitimate corporate activity, and is a good use of the futures market...unfortunately, most of the oil futures contracts purchased during the recent 200% increase in the price of oil was by corporate paper entities that never see or use a drop of the oil they're speculating on...THAT is the pure speculation that needs to be regulated to stop those parasites from screwing the rest of us (including the firms that buy futures to stabilize their oil costs)

[GoldenBoy812]

(which is determined by the demand for the stock, not necessarily by what the company is doing).

That above is why all investment is truly speculation. Even if a company is a sure fire bet to make a steady profit, the possibility that it will not meet profit estimates is always present.

Unless there is actual clairvoyance, speculation is the driving force in the market place. And ill take your statement as that of agreeing with me...

[GoldenBoy812]

"For the most part, firms purchase futures contracts to stabilize their input costs at future times"

- that type of futures deal is part of legitimate corporate activity, and is a good use of the futures market...unfortunately, most of the oil futures contracts purchased during the recent 200% increase in the price of oil was by corporate paper entities that never see or use a drop of the oil they're speculating on...THAT is the pure speculation that needs to be regulated to stop those parasites from screwing the rest of us (including the firms that buy futures to stabilize their oil costs)

The ones who made such purchases are being called as we speak. They now have to buy oil from producers for higher than market price. This is why markets correct themselves. Those speculators are losing their ass, or at least looking ridicules...