The only suckers are those who buy high and sell low in the hope...

The only suckers are those who buy high and sell low in the hope of making a profit.

Those who wish to take a long term position or who want to make a strategic investment in a company may buy, when the share price is on the rise, from those who took the greater risk of buying when the price was falling or when already low or when prospects were not as rosy as they later turn out to be.

Short term position takers (traders after quick profits) tend to buy when the price is falling, and so put a brake on the fall, and sell when the price is rising, and so put a brake on transient peaks. Thus the short term position acts like a car's shock-absorber to damp down transients and sudden large shifts in the price.

Only when the market exhausts the short term position taker's resources will the price rise beyond a particular trading range. That is one reason why we have seen the much bigger price moves on so many stocks recently - the short term position takers bought all they could buy and the stock continued to fall but without the safety net of the short position takers, so it fell far further than it otherwise would.

A final braking effect will occur when the market believes that the bottom has been reached and so short term positions will be once again taken and the transient lows will be once again sufficiently damped, a steady rise becomes more likely.

For IIG we see the short position takers stake out the area above and below the current SP. If they think that SP may rise in the mid term, the buyers will accumulate. Long term position takers who have lost heart will accumulate on the sell side along with the short position takers who already have their fill.

Note that a short position has nothing to do with short selling.

Thus the suckers are the ones who don't understand the market. Hopefully they learn from their errors and become useful investors or traders. We have all donated our fair share to the wise during our apprenticeship - that is the nature of the beast.

Put another way - stop moaning and try to learn something.

Robert