| | Here's some food for thought. What do you think?
OT: Found on another board ..
THE DEADLY ART OF STOCK MANIPULATION....
In every profession, there are probably a dozen or two major rules. Knowing them cold
is what separates the professional from the amateur. Not knowing them at all? You will
probably lose. What the professionals and the securities regulators know and
understand, which the rest of us do not, is this.
"RULE NUMBER ONE: ALL SHARP PRICE MOVEMENTS -- WHETHER UP OR
DOWN --ARE THE RESULT OF ONE OR MORE (USUALLY A GROUP OF)
PROFESSIONALS MANIPULATING THE SHARE PRICE."
In order to make these market manipulations work, the professionals assume: (a) The
Public is STUPID and (b) The Public will mainly buy at the HIGH and (c) The Public will
sell at the LOW.
Therefore, as long as the market manipulator can run crowd control, he can be
successful.
Let's face it: The reason you speculate in such markets is that you are greedy AND
optimistic. You believe in a better
tomorrow and NEED to make money quickly. It is this
sentiment which is exploited by the market manipulator. He controls YOUR greed and
fear about a particular stock. If he wants you to buy, the company's prospects look like
the
next Microsoft. If the manipulator wants you to desert the sinking ship, he suddenly
becomes very guarded in his remarks about the company, isn't around to glowingly
answer
questions about the company and/or GETS issued very bad news about the company.
Which brings us to the next important rule.
"RULE NUMBER TWO: IF THE MARKET MANIPULATOR WANTS TO DISTRIBUTE
(DUMP) HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL
CAMPAIGN."
Ever wonder why a particular company is made to look like the greatest thing since
sliced bread? That sentiment is
manufactured. Newsletter writers are hired -- either secretly or not -- to cheerlead a
stock. PR firms are hired and let loose upon an unsuspecting public. Contracts to
appear on radio talk shows are signed and implemented.
Stockbrokers get "cheap" stock to recommend the company to their "book" (that
means YOU, the client in his book). An
advertising campaign is rolled out (television ads,
newspaper ads, card deck mailings). The company signs up to exhibit at "investment
conferences" and "gold shows"
mainly so they can get a little "podium time" to hype you
on their stock and tell you how "their company is really different" and "not a stock
promotion.") Funny little "hype" messages are posted on Internet newsgroups by the
same cast of usual suspects. The more, the merrier. And a little "juice" can go a long
way toward running up the stock price.
The HYPE is on. The more clever a stock promoter, the better his knowledge of the
advertising business. Little gimmicks like "positioning" are used. Example: Make a
completely unknown company look warm and fuzzy and appealing to you by comparing
it to a recent success story. The only reason you have been invited to this seemingly
incredible banquet is that YOU are the main course. After the market manipulator has
suckered you into "his investment," exchanging HIS paper for YOUR cash, the walls
begin to close in on you. Why is that?
"RULE NUMBER THREE: AS SOON AS THE MARKET MANIPULATOR HAS
COMPLETED HIS DISTRIBUTION (DUMPING) OF SHARES, HE
WILL START A BAD NEWS OR NO NEWS CAMPAIGN."
Your favorite home-run stock has just stalled or retreated a bit from its high. Suddenly,
there is a news VACUUM. Either NO news or BAD rumors. I discovered this with quite
a few stocks. I would get LOADS of information and "hot tips." All of a sudden, my
pipeline was shut-off. Some companies would even issue a news release
CONDEMNING me
("We don't need 'that kind of hype' referring to me!). Cute, huh? When the company
wanted fantastic hype circulated hither and yon, there would be someone there to
spoon-feed me. The second the distribution phase was DONE....ooops! Sorry, no more
news. Or, "I'm sorry. He's not in the office." Or, "He won't be back until Monday."
The really slick market manipulators would even seed the Internet news groups or other
journalists to plant negative stories about that company. Or start a propaganda
campaign of negative rumors on all available communication vehicles. Even hiring a
"contrarian" or "special PR firm" to drive down the price. Even hiring someone to attack
the guy who had earlier written glowingly about the company. (This is not a game for the
faint-hearted!)
You'll also see the stock drifting endlessly. You may even experience a helpless feeling,
as if you were floating in outer space without a lifeline. That is exactly HOW the market
manipulator wants you to feel. See Rule Number Five below. He may also be doing this
to avoid the severe disappointment of a "dry hole" or a "failed deal."
You'll hear that oft-cried refrain, Or the oft-quoted statistic, "Nine out of 10 businesses
fail each year and
this IS a Venture Capital Startup stock exchange." Don't think it wasn't contrived. Ditto
for the high-tech deal, in a world awash with PhD's.
So, how do you know when you are being taken? Look again at Rule #1. Inside that
rule, a few other rules unfold which
explain how a stock price is manipulated.
"RULE NUMBER FOUR: ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER
PRICES SIGNALS THE DISTRIBUTION PHASE."
When there was less volume, the price was lower. Professionals were accumulating.
After the price runs, the volume increases. The professionals bought low and sold high.
The amateurs bought high (and will soon enough sell low). In older books about market
manipulation and stock promotion, which I've recently studied, the markup price
referred to THREE times higher than the floor. The floor is the launchpad for the stock.
For example, if one looks at the stock price and finds a steady flatline on the stock's
chart of around 10 cents, then that range is the FLOOR. Basically, the markup phase
can go as high as the market manipulator is capable of taking it.
From my observations, a good markup should be able to run about five to ten times
higher than the floor, with six to seven being common. The market manipulator will do
everything in his power to keep you OUT OF THE STOCK until the share price has
been marked up by at least two-three times, sometimes resorting to "shaking you out"
until after he has accumulated enough shares. Once the markup has begun, the stock
chart will show you one or more in
the volume -- all at much higher prices (marked up
by the manipulator, of course). That is DISTRIBUTION and nothing else.
WHENEVER you see HUGE volume after the stock has risen on a 75 degree angle,
the distribution phase has started and
you are likely to be buying in - at or near the stock's peak price.
Successful short-term speculators generally exit any stock run up when the volume
soars; amateurs get greedy and buy at those points.
"RULE NUMBER FIVE: THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET
YOU TO BUY AT THE HIGHEST,AND SELL AT THE LOWEST PRICE POSSIBLE."
Just as the manipulator will use every available means to invite you to "the party," he will
savagely and brutally drive you away from "his stock" when he has fleeced you. The first
falsehood you assume is that the stock promoter WANTS you to make a bundle by
investing in his company. So begins a string of lies that run for as long as your stomach
can take it.
You will get the first clue that "you have been had" when the stock stalls at the higher
level. Somehow, it ran out of steam and you are not sure why. Well, it ran out of steam
because the market manipulator stopped running it up. It's over inflated and he can't
convince more people to buy. The volume dries up while the share price seems to stall.
LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE!
When earlier, there may have been 500,000 shares trading each day for eight out of 12
trading days (as in the case of Software Control Systems), now the volume has slipped
to 100,000 shares (or so) daily. There are some buyers there, enough for the
manipulator to continue dumping his paper, but only so long as he can enlist one or
more individuals/services to bang his drum.
He may continue feeding the promo guys a string of "promises" and "good news down
the road." (Believe me, this HAS happened to me!) But, when the news finally arrives,
the stock price goes THUD! This is entirely orchestrated
"RULE NUMBER SIX: IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE
LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER
PRICES."
Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going
to force it into your pocket." The same concept can be more clearly understood by
watching the tape. When a market manipulator wants you into his stock, you will hear
LOUD noises of stock promotion and hype. If you are "in
the loop," you will be bombarded from many
directions. Similarly, if he wants you out of the stock, then there
will be orchestrated rumors being circulated, rapid-fired at
you again from many directions. Just as good news may come to you in
waves, so will bad news.
You will see evidence of a VERY sharp drop in the share price with
HUGE volume. That is you and your buddies running
for the exits. If the deal is really for real, the market manipulator
wants to get ALL OF YOUR SHARES or as many as he
can... and at the lowest price he can. Whereas before, he wanted you
IN his market, so he could dump his shares to you at
a higher price, NOW when he sees that this deal IS for real, he wants
to pay as little as possible for those same shares...
YOUR shares which he wants to you part with, as quickly as possible.
The market manipulator will shake you out by DRIVING the price as low
as he can. Just as in the "accumulation" stage, he
wants to keep everything as quiet as possible so he can snap up as
many of the shares for himself, he will NOW turn down,
or even turn off, the volume so he can repeat the accumulation phase.
The accumulation phase was TOP SECRET. The noise level was deadingly
silent. As soon as the insiders accumulated
all their shares, they let YOU in on the secret.
"RULE NUMBER SEVEN: CONVERSELY, YOU WILL OFTEN BE THE LAST TO
KNOW
WHEN THIS DEAL SHOWS
SIGNS OF FAILURE."
Twenty-twenty hindsight will often show you that there was a "little
stumble" in the share price, just as the "assays were
delayed" or the "deal didn't go through." Manipulators were peeling
off their paper to START the downslide. And
ACCELERATE it. The quick slide down makes it improbable for your
getting out at more than what you originally paid
for the stock... and gives you a better reason for holding onto it "a
little longer" in case the price rebounds. Then, the drifting
stage begins and fear takes over. And unless you have nerves of steel
and can afford to wait out the manipulator, you will
more than likely end up selling out at a cheap price.
For the insider, marketmaker or underwriter is obliged to buy back all
of your paper in order to keep his company alive and
maintain control of it.
The less he has to pay for your paper, the lower his cost will be to
commence his stock promotion again... at some future
date. Even if his company has no prospects AT ALL,
his "shell" of a company has some value (only in that others might
want to use that structure so they can run their own stock
promotion). So, the manipulator WILL buy back his
paper. He just wants to make sure that he pays as little for those
shares as possible.
"RULE NUMBER EIGHT: THE MARKET MANIPULATOR WILL COMPEL YOU INTO
THE
STOCK SO THAT YOU DRIVE
UP ITS PRICE SHARES."
Placing a Market Order or Pre-Market Order is an amateur's mistake,
typifying the US investor -- one who assumes that
thinly traded issues are the same as blue chip stocks, to which they
are accustomed. A market manipulator (traders
included here) can jack up the share price during your market order
and bring you back a confirmation at some
preposterous level. The Market Manipulator will use the "tape" against
you. He will keep buying up his own paper to keep
you reaching for a higher price. He will get in line ahead of you to
buy all the shares at the current price and force you to
pay MORE for those shares. He will tease you and MAKE you reach for
the higher price so you "won't miss out." Miss out
on what? Getting your head chopped off, that's what!
One can avoid market manipulation by not buying during the huge price
and abnormal trading volumes, also known
as chasing the stock to a higher price.
"RULE NUMBER NINE: THE MARKET MANIPULATOR IS WELL AWARE OF THE
EMOTIONS YOU ARE
EXPERIENCING DURING A RUN UP AND A COLLAPSE AND WILL PLAY YOUR
EMOTIONS LIKE A PIANO."
During the run up, you WILL have a rush of greed which compels you to
run into the stock. During the collapse, you WILL
have a fear that you will lose everything... so you will rush to exit.
See how simple it is and how clear a bell it strikes? Don't
think this formula isn't tattooed inside the mind of every
manipulator. The market manipulator will play you on the way up
and play you on the way down. If he does it very well, he will make it
look like someone else's fault that you lost money!
Promise to fill up your wallet? You'll rush
into the stock. Scare you into losing every penny you have in that
stock? You'll run away screaming with horror! And vow to
NEVER, ever speculate in such stocks again. But
many of you still do.... The manipulator even knows how to bring you
back for yet another play.
"FINAL RULE: A NEW BATCH OF SUCKERS ARE BORN WITH EVERY NEW
PLAY."
The Financial Markets are a Cruel, Unkind and Dangerous Playing Field,
one place where the newest amateurs are
generally fleeced the most brutally.... usually by those who KNOW the
above rules. |
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