Nok/ALL -- ALL ------ just sent this to the SEC, DOJ, Briefing.com, The Street.com, NASD, my local newspaper, my State Senators, and I am not done. I hope you all read it when you have time and take action as you see fit.
I let the SEC know that I sent this to all these other sources too. If we all do the same and demand action, it might help and it can't hurt. This is the actual text (below) which I changed ever so slightly from the earlier post. TIA for helping bring awareness to this obvious problem by sending your comments as well.
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COMMENTARY --- IT'S TIME TO DEMAND AN END TO MANIPULATION
May 9, 2000
I don't mind the rich getting richer. But I do care when it happens unfairly at the expense of the small guy. Such appears to be the case yet again recently.
Little did I know when I noticed the massive volume in CSCO and QQQ calls last Tuesday (the day before the massive one day Market upswing) that some major "Power Players" were going to make as much as a 1,200% return in the next 24 hours! Not only that but it was going to be a vertible slam dunk!
Of course this wasn't the only options play that made their day. After all, BEAS, EMLX, QLGC and many other stocks were up 20-30% Wednesday, which turned their Call option profits into massive winners in a single day.
The Market Was Manipulated Down
Yesterday's Market rush was known in advance. It was planned for weeks. The Markets slowly fell (and were driven down), day after day. Not even relatively good news seemed to matter. Earnings reports were far better than expected, inflation almost non-existent, the Feds had no plan to raise rates, consumer confidence was still high at 108+, the ISM report still well above 50 indicating growth, and the Semi Book-to-Bill ratio moving above 1.00 for the first time in a long, long time.
Not everything was rosy, but the very fact that some big name stocks rose 20-30% on May 8th was an indication just how manipulated down the Market had been. After all, CSCO's report wasn't that good and last time I looked it still has a PE of 50 on this year's earings ending in July. Nope, it's clear, CSCO was just an excuse for a one day massive manipulation "up" of the Markets.
The "Power Players" may not have known that CSCO's and QLGC's earnings would be good, but I strongly believe they were ready to ramp the Markets up bigtime if they were. That meant they could hedge and buy some puts and call minutes before earnings were revealed, knowing that if the earnings were good they were about to become a lot richer in one day. After all, the Markets, (mainly due to their manipulation of Market psychology and in turn the media), were clearly undervalued technically and they knew it. They made the most of it, too.
In fact the SOX (often the key to how well the tech stocks do) was particularly manipulated lately, as it sank to well below 500. Was this a logical time for the SOX to have fallen so dramatically especially after the positive Book to Bill number came out? Of course not! But nevertheless it happened and we meekly bought into it.
Demanding a Fairer Market
The sad thing is that 99.9% of small investors are apparently content to let the "Power Players" (i.e. the "incestors") decide their fate (and perhaps their future savings and income). Unless, that is, we all demand a change. After all, we know by now that the politicians, analysts, the SEC and media won't protect us. They didn't help warn us about the potential market crash beginning in spring of 2000. In fact most of them only gave coverage to those who told us to buy every mini-pullback over the last two years or "average in" every month and be patient. Twenty four months of a losing "strategy" later, most are still listening to analysts, the media, and are convinced that politicians and the SEC are doing a pretty good job. At least they don't care enough to spend 10 minutes writing a few e-mails to demand they do more to protect us.
Well, I think we need to do more, much more. I think we need to demand a market that makes more sense, and one in which the playing field is leveled and the criminals are given a different type of "Big House" in which to live.
If Fundamentals Matter, We All Win
We all need to think about how much easier it would be to invest successfully if fundamentals really mattered, if we demanded accounting be consistent, and if we insisted people get thrown in jail for defrauding the public. This includes jail time for those who start and profit off malicious rumors and those such as Market Specialists or Market Makers who use their position of power to manipulate stock prices.
Right Now, Fundamentals Are Way Out of Whack
How much easier would it be to invest successfully if PE's and PEG's and debt ratios really consistently meant something? Right now, we have no idea where companies losing massive amounts of money like TER should be priced, nor can we make sense of insane differences in valuations, even between stocks of companies in the same niche market.
Does TER stock really deserve to be at $31 when they are expected to lose .97 eps per share this year?
On the other hand, why was ESST trading at $13 the other day, with a PEG (PE to Growth) rate of .40 and a forward PE of 11? It is especially odd when competitor ZRAN, which has had less than 1/2 the eps earnings of ESST the last four quarters, had a PE near 90. C'mon, two stock in the same niche with PE's so widely divergent? Should wild rumors be able to cause one stock to trade at 1/8th the multiple of another in the same sector? That's crazy, right? But yet we all seem to pretty much accept it.
Well, some of us have other ideas. This not only cries manipulation but makes it nearly impossible for the small guy to know what a stock is worth. It also allows for much more manipulation. After all, when the Power Players decide to short a stock like TER, they can always suddenly cry that valuation does matter.
ACF is another example. It is in the financial arena with fairly stable performance and a low PE, yet it had a massive short position increase earlier this year and tanked from $30 to below $20 amid rumors and fear. Yet two months later it raced from $18 to $45, as the short positions all but disappeared. What was really going on? Will we ever really know? Does anyone really even care?
Can The Small Guy Really Make a Difference?
Yes! It's only because we demanded to know more about Enron, that the media covered it. They only cover what they think we care about and want to watch! I don't blame them for that. I blame us for not caring enough about manipulation to warrant their coverage.
Only because we got sick of the analysts' wild price targets and conflicts of interest, is good ol' boy, Harvey Pitt of the SEC, finally going through the motions of making things a little better.
Everybody claims they see manipulation every day, but yet very few do anything about it. Either people think they can use the manipulation to their advantage or people just don't care if the cards are stacked against them. They accept the constant "game-playing", the vicious rumors, and the hidden fraud.
Meanwhile the dishonest got a lot richer on Wednesday, May 8th. This select few made 300-1500% returns on some of their investments, while 99.9% of the rest of us, maybe smiled a little bit for awhile and were happy to accept some crumbs of success after months or losses or lost profits.
Yippee.
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TAKE TEN MINUTES TO HELP--- SPREAD THE WORD
People and Orgainzations to Write:
1) Your State Senators
senate.gov
2) Mr. Levin's website, head of the Senate Subcommittee dealing with these things:
levin.senate.gov
3) SEC website: sec.gov
4) NASD website: nasd.gov
5) Wall Street Journal: wsj.com
6) CNBC website: cnbc.com
- Robert Krause,
Independent writer and creator of the stock discussion site called one of the Net's 10 best by "Forbes Magazine" (3/2002)
on SiliconInvestor.com, "Dave Gore's Trades That Make Sense".
Subject 52162
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