Bill, have you read "HOT STOCKS CONFIDENTIAL ESSAY" under the Home Page of SI? Very interesting. Here's part of it.
" HOT STOCKS CONFIDENTIAL ESSAY
By George Chelekis * April 21, 1996
TEL: (813) 251-0030 * FAX: (813) 254-4677
NOTE: I believe this may be one of the most important essays
on the financial markets which you will ever read. This essay will be
the lead article in Hot Stocks Review, Spring 1996 (Part Two). Up
until recently, I knew that I was missing something, but I could not
quite put my finger on it. Now I know what it is. The data which
follows is only as good as you can actually use it. These are the cold,
savage and ruthless facts of market manipulation. I have not made
these up, but have dug them up out of out-dated, generally
unavailable books on Canadian market manipulations, and pieced the
rest together from observations, personal experiences and
conversations with market professionals and insiders. While the
books are out of date, the manipulations have been passed down
from one generation to another. The only thing missing was someone
to supply you with what those tricks were so you can become a more
educated speculator. Many thanks to Robert Shore and Vern
Flannery, of Market News Publishing, for finding and sending me a
copy of the book, "The Story Behind Canadian Mining Speculation" by T. H. Mitchell, first published in 1957 by George J. McLeod limited;
also Ivan Shaffer's book, "The Stock Promotion Game." I have been
told that many of these tricks are now illegal. If so, would someone
please tell that to the market manipulators.
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? Well, let's put it this way: How
safe would you feel if you suddenly found yourself piloting (solo) a
Boeing 747 as it were landing on an airstrip? Unless you are a
professional pilot, you would probably be frightened out of your wits
and would soil your underwear. Hold that thought as you read this
essay because I will explain to you how market manipulation works.
In order to successfully speculate, one should presume the
following: THE SMALL CAP STOCK MARKETS PRIMARILY EXIST TO FLEECE YOU! I'm talking about Vancouver, Alberta, the Canadian Dealing Network and the US Over-the Counter markets (Pink Sheets, Bulletin Board, etc.). One could also stretch this, with many stocks, to include the world's senior stock markets, including Toronto, New York, NASDAQ, London, etc. The average investor or speculator is not very likely to have much success in the small cap crapshoots. I guess that is what attracted ME to these markets. I have been trying, for quite some time, to answer this question, "How come?" Now, I know. And you should, too!
By the way, the premise of these books is uniformly: "While
these speculative companies do not actually make any money, one
can profit by speculating in these companies." THAT is the premise
on how these markets are run, by both the stock promoters, insiders,
brokers, analysts and others in this industry. That logic is flawed in
that it presumes "someone else" is going to end up holding the dirty
bag. Follow this premise all the way through and you will realize the
insane conclusion: For these markets to continue along that route,
new suckers have to continue coming into the marketplace. The
conclusion is insane in that such mad activity can only be short-lived.
I disagree with this premise and propose another solution (see my
earlier essay: A Modest Proposal) at the end of this essay.
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."
"RULE NUMBER TWO: IF THE MARKET MANIPULATOR WANTS
TO DISTRIBUTE (DUMP) HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL CAMPAIGN."
"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."
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."
"RULE NUMBER FIVE: THE MARKET MANIPULATOR WILL
ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE."
"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."
"RULE NUMBER SEVEN: CONVERSELY, YOU WILL OFTEN BE THE LAST TO KNOW WHEN THIS DEAL SHOWS SIGNS OF FAILURE."
"RULE NUMBER EIGHT: THE MARKET MANIPULATOR WILL
COMPEL YOU INTO THE STOCK SO THAT YOU DRIVE UP ITS PRICE SHARES."
"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."
"FINAL RULE: A NEW BATCH OF SUCKERS ARE BORN WITH
EVERY NEW PLAY."
The truly sane and only somewhat safe solution to all of this:
FIND GOOD COMPANIES IN WHICH TO SPECULATE AND GET INTO THEM AT THE GROUND FLOOR LEVEL. Anything else is criminal or stupid. This is a case where there really isn't a gray area. It's either Black or it's White. The company and its management are scamsters or they really intend to bring value to their shareholders."
Bill, this is only the major steps. Each step has really good detail if you have time and inclination to read the article.
David |
