Structure of a Market What information is available to us when trading ?
Is there any real hardcore factual information that the everyday Joe/Jane can use to make good financial decisions in the market ?
Many years ago I had a notorious uncle. He ran through the 70's and 80's like a whirlwind.
My uncle was a coke dealer. Not only did he sell cocaine he had a "connect" in the Dominica Republic that
got him the finest "peruvian flake" that could be made. With police on the books, and a few local politicians
in the "smash" my uncle had a virtual license to print money.
A few years ago after getting totally annihilated in the market I gave him a call just to talk. He always had wild stories
that cheered me up.
He started talking about the beginning of his career and a few experiences that he had running his own business.
He always said making money was boring. We are on the phone and he pauses for a minute I can tell he lighting a joint.
After a moment he tells how at one point his business was quite dull. Sales were moderate. Even though he had this fantastic
arrangement He felt that money he was making each time he bought and sold some of his product was peanuts to what it
could be. He knew he should have been able to somehow increase the amounts if transactions that were occurring. More sales Dude !
My uncle really prides himself on being smarter than the average bear.
So he thinks to himself hmm.. What if I tell a few of the people in the streets that I am running low on cocaine ?
What might that do. He thought it worth the shot since it could not hurt him, it would only be rumor & gossip.
He looked at it like this . By telling a few key people that he was running short on supply it would be almost like
putting an ad in the newspaper. And if his plan worked and there was a large increase in demand he had plenty of product
just waiting to be sold.
Next day my uncle goes to the barbershop sits in the chair and starts to tell the barber of his concerns. The fact that
he is running short of the "street gold". That night he met up with "Misty" a local stripper and pillow talked the gossip to
her also.
A couple of days go by and sure as a pig likes sugar, sales begin increasing. My uncle said he was ecstatic. I could hear it
in his voice as he re-lived the moment. He was making more money and more sales.
Then my uncle said.. it him .. I'm like whut whut hit you Unc ??
The thought. What if... What if I raise the price now ? Everyone already thinks I am running low. The "streets" do not
know how much cokee I have. They are running around here now thinking I am short on product.
And thats what he did, now he is laughing and coughing... I can tell he is high and in a good space.
He said they really thought it was a shortage and they just started buying more and more ...
My uncle said for the next months he just kept gradually raising prices, some of the smarter dealers even began selling my uncles product
back to my uncles own dealers. But my uncle didn't mind at all he was making money hand over fist.
My uncle said one day he just looked around and noticed that he did not have much cocaine left really. And to make matters
worse his Dominican "connect" was starting to act as flakey as the coke he sold.
Being somewhat concerned my unc goes to chill out for a bit with "Misty" She tells him there is a new and much bigger
distributor starting to make power moves cross town. He said that night he actually loved Misty.
Next morning he is off to the barbershop . Sits in the chair and starts talking his business. Telling anybody who will
listen how "Shit is bad for him", coke prices are going to fall to low and the boys across town are going to run him
out of business.
Next day no suprise to him... He has all the local dealers wanting to sell him their coke. Now he is on the phone just
laughing hysterically, saying these idiots are now ready to sell me their product for below what I sold it to them for
and don't even realize it !! My Unc was able to buy back huge amounts of coke, re-plenish his supply, buy another business, a new car,
home and go on a month long honeymoon with Misty.
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