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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	2/1/2002 2:00:20 AM
From: bambs	Read Replies (2) of 74559

Money Talks Yesterday, the market made a statement about the terrorist threats...it said...”don't worry”. The Government issued statements that there is a major threat of another terrorist attack even more damaging then Sept 11. The market had no visible reaction. Does the market not think that the Government knows what it's talking about? Does the market think that the government is over stating the risks to keep up support for a continued war in the middle east? Does the market think that the Government has things under control? Is the market being supported buy the fed or ESF in order to maintain calm. If the market had tanked on that news, would the public show more fear? Perhaps people would even retrench from areas of possible risk? If the market tanked on the Government statements release today, people would think that the threat is much more serious. They would envision a greater threat because it would appear the market voted and the public said "this is serious, we’re selling some stock, we could have a drop in the markets after like Sept 11." I think the market has become a theater. It's my belief that there exists serious manipulation in the markets. It's movements are often orchestrated in order to influence the public's perception of events. Some examples: FOMC cuts rates. Gold is perhaps pushed down. Almost every time the FOMC cuts rates gold sells off around the meeting. The result is people think that rate cutting or interest rates levels have nothing to do with the price of gold. The market action helps to influence people into believing that gold is just a commodity. Has no investment value. It is not a store of value. If powerful banks or brokerage houses were to sell gold around rate cuts over and over again for years. People would become trained to expect the event. They would give up trying to buy gold around FOMC meetings. A sort of learned helplessness. Some would even try shorting it to capitalize on the event. Here's another, let's say a garbage big cap tech stocks comes out with terrible earnings but beats the street estimates by a cent. (like we have seen over and over again for the last year). If they big boys quickly step in with big bids and push the stock higher. The price action usually sticks for weeks. They can then unload much more stock over time at an even higher price. The perception of value is created. (eg. INTC) By pushing up the stock on news, this clearly shows other weaker market participants that the news is good. And the stock is going up. Join in or lose money. I don't think that this occurs everywhere all the time. But I'm confident that it's done more often then we think. I think that stocks and sometimes commodities like gold, oil, even currencies are targeted at key times to instill confidence...or crush it...what ever the manipulator chooses. Look at the rally we have had since the Tyco execs stated that they had "plans" to pony up $30 million to buy there stinking stock at half the share price they sold $100 million last year. The market loved it. It restored confidence...for the time being. With out going into much detail…we all know that brokerages usually support the IPO’s they underwrite. They don’t want the public to get the impression that they don’t believe in what they are underwriting. How about the action after an analyst upgrades a stock. Niles looks like a fool for his recent call on IBM. Abby J and Blodget are finished…they can’t move the markets like they used to. They have been wrong too often. Now, no one listens to their calls. Some even bet against them. The stronger houses support their analyst’s calls. It’s big profits to have that kind of power. A market maker can buy up a stock before the house analyst upgrades it. The market maker can then unload to “satisfy the demand”. It’s like printing money. There is no better tool for influencing peoples opinions on an event then driving the market up or down with big money in relation to the event. Most people trust the market as if it an instantaneous voting booth that gauges public opinion. Nothing could be further then the truth. The wealth’s votes count for more and big money often cast their own vote for “profit later, influence public perception today”. Long live the old adage "Put your money where your mouth is". It has power. More power then anything else in our society. "Money talks…" In a capitalist society it's not surprising that money is the greatest motivator. Actions always speak louder then words. In the USA, the action of slapping down a few billion on one side of a trade screams "believe it".

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