Hidden in translation

Mike Brownnutt
4 min readNov 10, 2022

How big corporations take your money.

I saw a headline this morning which I found… problematic.

Financial news on TV is often aimed at screwing the viewer over while lining the pockets of The Man. But this was a particularly special example.

What they said

Stocks can’t bottom until the retail investor gives up.
That’s what we see at the end of every major bear market.”

What it sounded like

It sounds like they are saying something like,

“We get it: You got into trading when you were flush with time and cash during lock-down. And things looked good for a while. But now you just see your account losing more money every single day. It feels like you have lost control, and it feels like the drop will never end. Inflation is up, there is a recession on the way, the market is falling. And it feels like the market will never stop falling. But it will. And you have the power to make it stop falling.

“When you — the little guy, the retail investor — when you stop holding on to those last few shares of yours, then everything will start getting better. But until then — until you let go — things are just going to get worse. When you see inflation up, unemployment up, bankruptcies up, just remember: you could have turned this market around.”

What exactly is Ms Dawson telling us? And why? (Source: CNBC, via YouTube.)

What is happening

Every time you sell a share, someone else buys that share. If you are able to sell your share are a crazy low price, that is because someone is willing to buy it at a crazy low price. If you sell a $10 bill for $5, someone will buy it from you. And if the guy next to you panics and sells his $10 bill for $4, someone will buy it from him too. If you sell a $10 bill for $4, you are either desperate (maybe you really need change, and you really need it now) or you are dumb (and you don’t know the value of what you have). In either case, people who are neither desperate nor dumb will happily take your money.

How does the “Smart Money” make a profit? By scaring the “Dumb Money” (yes, that is the technical term) into selling at a loss. And they will scare as many people as they can, as much as they can, for as long as they can. And for as long as the Dumb Money panics, the price goes down, and the Smart Money picks up absolute bargains. When there is no one desperate enough or dumb enough to sell at such a low price, then the price stops falling. Every bear market ends when there is no one left to fleece.

When there is no one left to fleece, the price can fall no further. The price starts to go back up again, and the Smart Money sells back to you at a profit everything they have just bought from you.

This is not a secret. There are even companies like Sentiment Trader that will tell you (for a fee) when Dumb Money has nothing left to give, and so when Smart Money need to stop squeezing them and start selling back to them.

At some point, Dumb Money (yes, that is the technical term) will have sold all they can. That marks maximum fleecing, the bottom of the market, and the moment when Smart Money can start selling back at a premium all the shares they just bought at bargain prices. (Source: Sentiment Trader.)

So here is what Ms Dawson meant

Cameron Dawson works for NewEdge. No secret. That’s how she was introduced. And it says it right there on the screen. NewEdge is a brokerage firm that serves institutional clients: Smart Money; the kind of money that aims to fleece retail investors. CNBC puts her on TV like she is helping the general viewing public. But that is the opposite of what she is doing. She is helping her company to fleece you just a little bit more.

When she said, “Stocks can’t bottom until the retail investor gives up,” it feels like she is offering some way for you to actually take control, make a difference, and stop the pain that so many people are feeling. But what she actually means is, “As long as there are still people that we can panic into selling, we can keep driving the price down. We will only have to stop taking people’s money when there is no one left who is desperate enough or dumb enough to let us take their money.”

It is true that every bear market ends when there is no one left to fleece. It happens to be true that every bear market ends when the retail investors give up. But that second point is only true because it is not in the interest of the corporations who own TV Networks to help retail investors understand that they do not need to be fleeced.

Disclaimer: This blog post does not constitute any offer, or solicitation to offer, or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances.

Claimer: Regardless of your individual needs, investment objectives and specific financial circumstances, it is exceptionally likely that people who work for big financial organizations are trying to make money off you, and may not have your best interests at heart. That much at least I will offer as investment advice.

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Mike Brownnutt

I have a Master's in theology and a PhD in physics. I am employed in social work to do philosophy. Sometimes I pretend that's not a bit weird.