AA,
Well said and I agree to a large degree.
However, I think that it is unlikely that any short term engineering is taking place as well. My reasoning goes as follows:
1) No money center bank would engineer the indexes if it were not profitable, at least in the short run.
2) If it is possible to profitably engineer indexes, it should be possible to make short term trading profits off those as well.
3) Propietory trading in banks and brokerages have had abysmal levels of performance lately, to the extent that shops are being closed.
Thus ... 3 doesn't hold, hence 2 doesn't hold, hence 1 is unlikely unless the engineers are working overtime w/o pay, i.e. they are irrational. And I believe in market rationality.
What do you think of this line of argument?
-BGR.
PS: My main complain, however, was that there is this catch-all bucket of manipulation that some on this thread use to hide their inability to predict the market and/or statistical measures in the short term. I was trained as an engineer. So, if a theory repeatedly fails in practise, I know well to abandon it. If I suspect that my model is not complete, I include new parameters (like manipulation) if identified. But I never claim an incomplete model to be right even if it is wrong, based solely on my biases. That just makes no sense to me, as then I am always right. This doesn't meet the criterion of a falsifiable hypothesis and hence is not a objective line of thought IMHO. |
