The great trading firms are just that, but it's a mystery to the average stockholder just how they trade. Wall Street was a vast collection of misnomers, beginning with the street itself, which is the approximate width of a back alley in most American residential areas, and even the sidewalks seem overly narrow for the degree of traffic they serve. When purchase orders came in to a major house, like the largest of them, Merrill Lynch, the traders did not go looking, physically or electronically, for someone willing to sell that particular issue. Rather, every day the company itself bought measured holdings of issues deemed likely to trade, and then awaited consumer interest in them. Buying in fairly large blocks made for some degree of volume discounting, and the sales, generally, were at a somewhat higher price. In this way the trading houses made money on what bookies called a "middle" position, typically about one eighth of a point. A point was a dollar, and thus an eighth of a point was twelve and a half cents. Seemingly a tiny margin of profit for a stock whose share value could be anything up to hundreds of dollars in the case of some blue chips, it was a margin repeated on many issues on a daily basis, compounded over time to a huge potential profit if things went well. But they didn't always go well, and it was also possible for the houses to lose vast sums in a market that fell more rapidly than their estimates. There were many aphorisms warning of this. On the Hong Kong market, a large and active one, it was said that the market "went up like an escalator and down like an elevator," but the most basic saying was hammered into the mind of every new "rocket scientist" on the huge computertrading floor of Merrill Lynch headquarters on the Lower West Side: "Never assume that there is a buyer for what you want to sell." But everyone did assume that, of course, because there always was, at least as far back as the collective memory of the firm went, and that was pretty far.

Most of the trading was not to individual investors, however. Since the 1960's, mutual funds had gradually assumed control of the market. Called "institutions" and grouped under that title with banks, insurance companies, and pension-fund managers, there were actually far more such "institutions" than there were stock issues on the New York Stock Exchange, rather like having hunters outnumbering the game, and the institutions controlled pools of money so vast as to defy comprehension. They were so powerful that to a large extent their policies could actually have a large effect on individual issues and even, briefly, the entire market, and in many cases the "institutions" were controlled by a small number of people—in many cases, just one.