Block Traders
Why are block traders' (market makers') forecasts so valuable?
- Block traders forecasts are logically credible. They are made by experienced, well-informed, highly-motivated and constantly involved at-risk professionals who are essential to the market-making process.
- Block traders forecasts are forward-looking. Made today, in contemplation of tomorrow's developments, they reflect the expected behavior of large investor clients who have the capacity to move market prices and are reinforced by frequent day-by-day direct communications.
- Block traders forecasts are not dependent on historical studies of economics or past stock price patterns, accounting-based earnings or EPS forecasts, corporate management "guidance" or investment banking & "Street" sponsorship or coverage.
- Block traders forecasts are revealed by self-protective actions which have readily measurable costs to the market-maker where competitive market surroundings prevent "gaming" the process.
- The driving rationale of the block traders forecasts is rooted in human nature, and in the basic functioning of effective, honest markets.
- Block traders forecasts output provides great compare-ability. Forecasts produce frequently asymmetric price 'ranges' with equally-likely limits both above and below the current market price. The availability of unbiased downsides encourages clear Risk - Return tradeoffs. Potential price moves are highly comparable for any given stock through time, and (at any given point in time) across stocks of widely varying competitive circumstances.
- Block traders forecasts time horizon encourages timely objectives & actions. Commitments within foreseeable time spans avoid price round-trips. The odds of reaching reasonable targets are high. The transaction costs of implementing shorter-term strategies now are low.
- Block traders forecasts have a long, live record of performance. There has been no meaningful change in the forecast model for over 25 years. Live forecasts were made weekly in the 1970s - 1990s for hundreds of stocks and are being made daily for thousands of stocks since the century turn. Extensive record-keeping shows repeated price predictive results simply from imbalances in current upside vs. downside prospects. Our more sophisticated approach improves on the predictive reliability.
- No other comparable price predictive forecasts are known to exist.