November 10, 2021


The drug wears off.  Four-word summary for monetary policy and markets.

If you’re thinking, “I can’t take any more market structure or monetary policy!” you’re not alone. Karen is with you!

I won’t bore you, promise. There are things to know. Hang with me.

First, this:  Market Structure EDGE LLC, our sister company offering decision-support to active traders, just won Best Day Trading Software at the Benzinga Fintech Awards.

It’s been our dream to democratize markets for public companies and investors. ModernIR has done that for public companies, and now we’ve hit a milestone in our grand scheme, with EDGE.  We give everyday people in the stock market the power to see how money moves. What’s coming. Like we do for you, public companies.

But daytrading? you say. 

We can be flat-earthers. Or not. No matter how much we want to eradicate short-termism, to put time on our side, it won’t happen so long as rules promote one and squelch the other.  We cannot call a market “long-term” that’s 10% about the long-term, 20% about tracking benchmarks, 70% short-term.

If the central tendency is brief, so is the market.

Now, investors can use EDGE for long-term management.  Bias stock-holdings to those that spend time over 5.0, where Short Volume is on a general downtrend. That means demand is greater than supply. When that balance shifts, and it will, reweight.

We use these metrics for you, public companies. Market Structure Sentiment. Short Volume. Demand. Supply.

Illustration 122773491 / Jagger © Creat Art |

The truth is short horizons will be loved, as Maroon Five says.  If you want the moves like Jagger – we’re seeing Mick and the remaining Rolling Stones in Atlanta tomorrow – don’t spend every day out on your corner in the pouring rain, wishing for what isn’t.

Back to the drug.  Money.  Once, you could pledge $600 billion to save everyone from a financial crisis, and the market would soar like an eagle.

Last Friday late, Congress winked and dealed and handshaked and back-slapped to $1.2 trillion for infrastructure, or whatever the number is, and Monday, the market limped to weak gains and Tuesday gave them back.

The drug is wearing off.

Public companies, you’ll get this.  If your market capitalization is $X with 500 million shares out, shouldn’t it go to $2X with a billion shares issued?

Well, no.  You can’t dilute shareholders without delivering more value. Shares reflect business capacity. There must be substance. Stock alone isn’t enough.

What about meme stocks, the short-termism you just talked about?

Those aren’t marks of an evolution in thinking but cracks and strains in cultural credulity.

Follow me here. We’re getting to the crux of why the drug wears off in the economy. 

People in Congress and their theorizing acolytes in academia who author much of what becomes legislation suppose you can create a trillion dollars and voila! Growth.

Except the real world will not stop hassling you, as Matchbox Twenty would say. No matter the headlong societal rush into a mythical metaverse. In the real world, unless you can marshal twice the resources, pouring capital into the market won’t double its value.

I’ve said this before:  All output equals labor x capital. The more money, the more of it you need to make the same stuff, and the less people want to work, the more labor costs.

So the price of stuff goes up, availability goes down.  And worst, the assets that shelter value – stocks, bonds, art, cars, real estate, sports teams, NFTs, cryptocurrencies, social tokens, etc. – will start wobbling too.

And the boomerang comes back. Money loses value, fewer people can afford stuff. Consumption declines, prices fall.

Ironic, isn’t it, as Alanis Morrissette would say.  Give everybody at the table free poker chips and the people who want to win quit, and the game becomes pointless.

What’s the real solution? Spend less, save more, be efficient, be productive, cut the waste, count on nothing, be lean and tough.

No wonder the market is short-term. If you can’t count on tomorrow, trade today. We adapt to that reality, public companies, investors, traders.

I think we need and should want a reckoning, so we can get it back to good (another Matchbox Twenty reference). In the meantime, see the market as it is. Understand why more money is no panacea.

To paraphrase the Rolling Stones, if want to say time is on our side, to shout that if you start us up we’ll never stop, well then. We need a new drug.

Share this article:

More posts

dreamstime m 105330423
June 19, 2024

One of our customers at EDGE calculated that 82% of Demand in the S&P 500 is from three stocks (NVDA – now the largest –...

June 12, 2024

High-frequency traders are data-dependent. The Federal Reserve ought not be.  I’ll explain. The U.S. central bank today concludes its open-market (FOMC) meeting. Jay Powell speaks. ...

dreamstime m 4536788
June 5, 2024

Somebody pulled a pin and dropped a grenade in the stock market and nobody noticed. Let me explain: Now, there were explanations. Index options on...

dreamstime m 36265338
May 29, 2024

Size matters.  Does trade-size matter?  The average trade in S&P 500 stocks is 87 shares this week (five-day average). Think about that. Quotes are in...

dreamstime m 87656041
May 22, 2024

It’s tough being a market strategist.  Mike Wilson, chief equity strategist for Morgan Stanley, has thrown his bear towel on the laundry pile and lifted...

dreamstime m 17907458
May 8, 2024

Should a stock like COKE rise 20% in a day?  Executives love it, sure. But it’s aberrant behavior at loggerheads with what the dominant money...