My thanks to Trader Mike, who wrote a nice article on a subject we had been discussing all weekend on the member site as all the market manipulation of the past two days made me forget to talk about the evidence of market manipulation we uncovered last week.
Prof posted this clip on Friday in which Cramer discusses how easy it is (and how he did) to manipulate the markets by pushing stocks up, down and all around virtually at will with the enlisted cooperation of the financial press, who would print whatever spin he wanted:
"This is blatantly illegal but when you have 6 days (to end the Q) and your company may be in doubt because you are down, I think it’s really important to foment, if I were one of these guys, an impression that RIMM (the example) isn’t any good." Jim goes on to describe in great detail how he could spend just $15M to $20M to "knock RIMM down, which would be fabulous because it would beleaguer all the moron longs…"
In the context, he was talking about RIMM as it was a fulcrum stock, one that moved a large portion of the market (like Valero) where the funds would concentrate their energy in order to rally (or crush) the broader markets.
"It’s really important to get the Pisanis of the world and people talking about it as if there is something wrong with RIMM, then you call the Journal and you get the Bozo reporter on RIMM and you would feed that Palm’s got a killer (product) that it’s going to give away…"
On manipulating AAPL: "Apple, it’s very important to spread the rumor that both Verizon and AT&T decided they didn’t like the phone… and this is very easy because the people who write about Apple want that story and you can claim that it’s credible because you spoke to someone at Apple because Apple doesn’t issue any statements." Cramer says he would do this in conjunction with placing large put orders (1,000 blocks) to create the impression that something was happening and then HE would call Pisani and say, "hey, something is happening, there’s a lot of put buying going on at Apple... What’s important when you’re in that hedge fund mode, is not to do anything remotely truthful, because the truth is so against your view that it’s important to create a new truth, to develop a fiction. And the fiction is developed by almost anybody who is down like 2% to up 6% a year…"
"The great thing about the market is it has nothing to do with the actual stock." Jim is, of course talking about short-term manipulations but, as we can see, these can go on for quite a long time.
As I said on Friday: "This I love about Cramer - he actually admits this stuff! This is the damage 1 guy with an agenda can do to you, imagine what happens after they all play racquetball at breakfast and synchronize their agendas…." Cramer was on quite a roll last week (although the first video was from Christmas) as he also took the time to talk about how brokers can work the system to their advantage.
Hedge fund lawyer Ron Geffner of Sadis & Goldberg called the interview a "somewhat surprising confession to make publicly, which definitely invites suspicion by regulators. Whether he violated the law is unclear," added Geffner. "That is dependent on his trading records. But it’s clear that he seems to be challenging regulators to come and examine him."
Well good for Cramer! Whether intentional or not it’s important that investors are aware of the games that get played in these markets and I want to thank him for letting people know I’m not just a crazy conspiracy theorist when I tell people the markets are being manipulated - THEY really ARE out to get us!
Let’s keep this in mind as I have been driven to capitulation myself based on the past two days of baseless movements that have amazingly retraced critical technical levels because, as Financial Sense says: "In determining how to play these moves it is well to remember that The Cartel quite apparently likes to use (we reiterate) technical patterns (e.g. Fibonacci retracement levels, Head & Shoulders, etc.) as “lures” to lure in precious metals and strategic commodities longs and then to take them down. Longs in these circumstances are literally the hens led into the slaughterhouse by technical “lures".”
Like I always say, it doesn’t matter if the market is gamed, as long as we know what the game is!