praha1

How to Profit from Market Manipulation

75% of investors wouldn't be in stocks anyway if a decent return could be earned in secure bonds. We're just forced to be in equities and assume risk we don't want because of a Federal Reserve that has been dropping interest rates continuously since 1983 (we can blame Volcker for that one). The end of that game has now arrived - interest rates cannot go any lower (oops sorry! - I forgot we have quantitative easing to drop interest rates even further at the right end of the curve so all of us will make absolutely nothing anywhere).

You have to be blind as a bat to not see the machinations of desperate government everywhere - in the equity market, the bond market and the commodity markets - to think otherwise is just being naive. The post 1971 financial system is simply dying. And the sooner it's gone the better for all of us. I have a right, thank you, to work and save for my retirement without submitting my savings to undue risk. I have a right to save my wealth and not have it confiscated by the govenment via incessant inflation. The system is going to die - If I could kick it and make it pass on sooner, I'd do it. You be a slave to the Fed and the Treasury department. I'll take freedom any day.

On Mar 26 02:34 PM Chris B wrote:

> 1) How sad. People who don't know how to calculate the fundamental
> value of a company are often awestruck at how the value of a company's
> equity can change by millions of dollars from day to day or hour
> to hour. They have no better source of information than past prices
> to inform themselves about the price they should be willing to pay
> or sell for. Yet, markets can't be efficient if we have swings of
> this magnitude! This leads some to technical analysis, and others
> to conspiracy theories! Only a handful of people learn how to figure
> out what "low" and "high" are and how to buy and sell at close to
> those points. Is education manipulation?
>
> 2) Rising price volatility is a sign of both bottoms and tops. In
> both situations, the number of buyers declines and transactional
> frequency becomes more erratic. In a top situation, fewer and fewer
> buyers are willing to take increased risk for less and less return
> which eventually turns the price once the sellers capitulate. In
> a bottom situation, many potential buyers are sitting outside of
> the market, waiting for it to go up a ways before they get in. Fast,
> sharp swings are the result of either situation.
>
> 3) I never heard complaints about manipulation when markets were
> going up. Yet hundreds of thousands of financial Neanderthals are
> now calling their 401(k) administrators demanding a return of their
> money, which they feel was taken away from them, obviously by nefarious
> conspirators. Ha!
>
> 4) Trading in and out of stocks is inherently a zero sum game. For
> party A to make a profit, party B must take a loss - or at least
> miss out on ownership of profits for a period of time. For manipulation
> to occur, party A would have to convince party B to pay too much
> for shares, while not themselves overpaying for shares from party
> C. I don't follow from this article how exactly such a scheme would
> be sustainable in a market with millions of well-informed participants.
> Perhaps the better question is this: How could short-term stock prices
> ever be predictable and not attract attention from the millions of
> participants looking for arbritage opportunities?