Most traders religiously go about their business on the stock market. They do the research; scouring the news reports, the EDGAR filings, the financial statements. Analyzing charts. Looking for trends. Is the stock overbought? Is the stock oversold?
They faithfully keep CNBC or Bloomberg on in the foreground (or the background), waiting for "breaking news," the latest economic reports, commentary and analyst sentiment. They manage and re-manage their Java-based stock tickers to reflect their latest "plays" and holdings. They open up their Level 2 applets for stocks they already own, or are thinking of getting into - long or short.
They watch the futures and the DIA, QQQQ, SPY, XLF and XLE "ETFs."
Traders have it down to a routine. Almost a science.
But, I wonder if traders are even aware of one other critical component of trading - that is, the extent of the manipulative "goings-on" involving, pretty much, every stock in the stock hemisphere, and just how much manipulation affects the choices traders end up making each and every trading day.
No one likes to talk about market manipulation - whether in the stock market or in other financial trading markets. It's almost "taboo" to speak about it openly, although recently, more and more well-known traders and marketeers have been speaking out.
It's gotten to the point now, by early 2009, that savvy traders no longer trust the markets, not one thing about them. And for good reason. To date, no single regulatory body or enforcement agency has been able to effectively deal with market manipulation, mostly because of either a lack of manpower, a lack of understanding of actual trading, or even due to a complete lack of caring.
Shady traders, big and small, know this. And they go and go and go, with utter impunity, convinced they will never get caught. They take their profits and don't give one iota about who gets hurt because of their acts. Then, they move on to their next unsavory trades.
I don't believe there is a trade-able financial instrument out there that is "clean." Seems like there's always some shenanigans going on, or being attempted, by at least someone with the funds to do it.
So, I chuckle sadly when I hear that President Obama and his team of wizards say they are going to effect change in the economy. Change of what, exactly? Why keep throwing taxpayer money against the wall hoping to fix things, when the inherent ethical underpinnings of the financial and trading markets have gotten so horrendously out of control?
There's no uptick rule. We have unabated "bear raids" and "bull cranks." We have "short and distorts" and "pump and dumpers" everywhere. We have the FASB 157's mark-to-market fiasco. And we have swaps and derivatives being traded in the dark. And that's just the basics.
Given that environment, why would any trader even want to trade? You have to now spend more time trying to assess a stock's potential for manipulation than the company's actual fundamentals or performance. And traders are trying to assess a big black hole when it comes to manipulation. You finally decide to get into a stock long, for example, only to suddenly have the stock hammered down by an unscrupulous trader with sufficient funds available to him, working his shorting agenda.
And that's just the traders being relentlessly blind-sided, you know - the people out there every day in the Wall Street trenches slugging it out. What about the thousands of people out on Main Street - the taxpayers who invest in the markets, who don't trade, and simply give their money to "professionals" to manage? If traders are being bamboozled, then the passive investor-taxpayers are simply being swindled. Not by the money managers, but by the same market place that money managers have to deal with, once they are in charge of where to put their clients' hard-earned money.
If taxpayers only knew just how shady the markets have become, they would pull all their money out before you could say, "Let Me Know When It's All Cleaned Up- And Only Then Will I Even Think Of Ever Investing Again." Makes for a great T-shirt, don't it?
I mean, who wants to play craps with loaded dice? It's that simple. The only thing that separates Wall Street from gambling in Vegas in the first place, is that in Vegas, you are mostly at the mercy of luck. In the stock market, an investor armed with sufficient research and savvy is supposed to be able to have far more control over his "luck", in predicting a stock will go the right way. Else, he would go to Vegas, put his money down - 50/50 - and pray.
Now, manipulation issues place Wall Street investing further and further into the Vegas gambling camp. So, a smart investor would simply say, "Well, if that's the case, I'd rather go to Vegas - at least the food is better."
Obama, if you're listening, and I know you are - you need to deal with this. Immediately.
You can hire all the "dream team Summa Cum Laude" experts you want. But, unless you deal directly with what has happened to the very financial markets you are using taxpayer money to fix, nothing will change. You have to start with fixing the foundation. You've inherited a house whose walls are filled with hoards of termites, and if you don't deal with the infestation you eventually don't have a house.
It's enough already. Get a panel together. Make sure all it does is address market manipulation - including those policies that feed it. If the SEC needs better regulation as ammunition and vastly more manpower - give it to them. You can spend a trillion dollars trying to repair the house. But the termites will still be in those walls. Or, you can spend $10 billion and get rid of the termites once and for all - and make sure they don't come back.
And, if the markets are cleaned up, traders can trade better, money managers can manage money better- and everyone makes profits, including average taxpaying-investors (who can also begin to replenish their retirement nest eggs that have gotten tanked). All this, in turn, will help re-stimulate consumer spending. As stock prices go up, the fear and lack of faith in the current market will be replaced with stability and confidence. Companies will be far less anxious about their earnings, their debt, attracting investors, and their overall bottom-lines. And this will lead to hiring-back employees.
And when ultimately the markets recover, as the economy gets back on its feet, and stability and confidence are eventually replaced by greed and arrogance, then you keep the vigilance coming. Never let up.
Yes, there is supposed to be some "risk" to investing. Stocks shouldn't just go straight-up. But, at least, level the playing field. Institute fair play. Less Vegas. More chess playing.
The time is now, President Obama. Your time has come.
Repeat after me:
I, Barack Obama, do solemnly swear, to faithfully end all market-manipulation wherever it may be found. Yes I can!
Yes I can!
Yes we can...