# Will the big boys intentionally crash the market ?



## lonewolf (Jun 12, 2012)

In 1929 the boys raised margin requirements to crash the stock market.

When the Hunt brothers were trying to corner silver, The exchange banned all buy orders, would only accept sell orders.

This time around will they close the tax loop holes that give companies an incentive to borrow money hand over fist to buy back their own stock ?

Will the game be paid fairly or will the boys crash this market intentionally ?


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## RBull (Jan 20, 2013)

What do you think our Canis lupus friend?

I don't know enough about this to comment.


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## humble_pie (Jun 7, 2009)

lonewolf said:


> When the Hunt brothers were trying to corner silver, The exchange banned all buy orders, would only accept sell orders.



wolf i don't believe this is true, the hunt bros were not buying silver on any organized stock exchange, instead they bought up silver futures. I'm not sure which exchanges would have hosted silver at that time ... perhaps the Merc, as it is today? 

surely a ban on buying silver futures, once the authorities got a whiff of what was going on, would have been a good thing? meanwhile i don't believe that buying stock was ever interfered with ...


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## Just a Guy (Mar 27, 2012)

Happens all the time...

http://youtu.be/GOS8QgAQO-k

I think you're wondering more if their manipulations will have a cascading effect and get out of control...


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## lonewolf (Jun 12, 2012)

Humble you could be right. It was in the last few days that I read that the exchanged banned buy orders on silver & would only accept sell orders. It never mentioned the name of the exchange, I tried going back to see if I could find where I read it on the internet so I could post write up but could not find it. Cant believe everything that you read & if what I read was not true then I was wrong.


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## Toronto.gal (Jan 8, 2010)

lonewolf said:


> In 1929 *the boys raised margin requirements to crash the stock market*.


Maybe I can learn something here. When was the margin increased to 50%?

The credit boom/margin were certainly factors for the crash, but what about others, like overpriced stocks, etc.? My understanding was that there had been no margin requirements prior to the crash per se, but a suggested [not strict] 20%, which was later raised to 50% with 25% maintenance requirement as a result of the crash.

Do you happen to know what the outstanding margin at the time had been compared to the MV?

Can you think of a recent Composite that crashed 72% since 08 as a result of a huge market bubble?

How much did markets rise between 1923 & 1929?


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## dogcom (May 23, 2009)

They crashed the silver market in 2011 by raising margins. I think it would have crashed anyway but why not make the boatload of money by making it happen on your timetable.

On the stock market today I don't think they would do such a thing because of all the effort they have put in to keep it elevated. Today's market is about the US dollar continuing to be the reserve currency and all the risk of geopolitics and so on. I believe making boatloads of money is secondary because they already have all they need and is more about control and power. 

If the game is over we may see any tool used that could crash the market if it is in their interest to retreat or go in a new direction.


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## lonewolf (Jun 12, 2012)

TGal

I posted a day or so of having read an article that did not give the details. It was just a single sentence in regards for 1929 & the silver market. I have gone back to some of the sites that I often read but could not seam to find it. Maybe I made a mistake regarding info. The margin requirements based on what I found on the net were 10% in 1929 ( 1000 dollars down could buy 10 000 worth of stocks ) Then from what I can gather investors could not buy with margin @ some point between 1929 - 1934, Then I think ? it went to 50% margin sometime in 1930s from my understanding ???

I value truth & try to post that which I believe to be true, perhaps I failed with this one.


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## Toronto.gal (Jan 8, 2010)

lonewolf said:


> I value truth & try to post that which I believe to be true, perhaps I failed with this one.


Speaking of truths & crashes, who do you think crash/die sooner, optimists or pessimists? 

'Dr. Toshihiko Maruta said: "It confirmed our common sense belief. It tells us *mind and body are linked and that attitude has an impact on the final outcome, death.*" But he and his team could not say if this was due to happy people's immune systems being stronger directly because of their optimism.'

'Wipe that smile off your face, optimists: Science says you’ll die sooner....One idea is that if you foresee the future being horrible, you'd take steps to fix it. "Perceiving a dark future may contribute to taking improved precautions. *"Accepting or even foreseeing future loss potentials may serve to immunize the self against possible threats in the future and thus serve as a secondary control mechanism in terms of predictive control."*

http://www.washingtonpost.com/blogs...face-optimists-science-says-youll-die-sooner/


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## BoringInvestor (Sep 12, 2013)

lonewolf said:


> When the Hunt brothers were trying to corner silver, The exchange banned all buy orders, would only accept sell orders.


If the exchange only accepted sell orders... who was buying?
Isn't this the same as effectively halting trading?


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## lonewolf (Jun 12, 2012)

Boringinvestor

My guess by what the article meant by this is perhaps the members or certain members who held a seat on the floor did the buying. Any buy orders sent to the floor perhaps were not taken ???????????


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## BoringInvestor (Sep 12, 2013)

lonewolf said:


> Boringinvestor
> 
> My guess by what the article meant by this is perhaps the members or certain members who held a seat on the floor did the buying. Any buy orders sent to the floor perhaps were not taken ???????????


Perhaps, but it's ambiguous what exactly it means, and how exactly it may have manipulated the markets.


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## humble_pie (Jun 7, 2009)

to the best of my knowledge the market makers always stand ready to buy at their posted price.

in very extreme cases (tripping the breakers), stock exchanges will be temporarily & automatically shut down. This has already happened a few times since the circuit breakers were introduced.

what has been described here was only a ban on buys. It also pre-dated the modern circuit breaker safety system.

during price plunges of less than circuit breaker magnitude, market makers will widen their spreads dramatically. This is the danger for naked put sellers & short artists. Their margin vanishes while their costs to escape their plunging positions soar out of control.


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## lonewolf (Jun 12, 2012)

dogcom said:


> They crashed the silver market in 2011 by raising margins. I think it would have crashed anyway but why not make the boatload of money by making it happen on your timetable.
> 
> On the stock market today I don't think they would do such a thing because of all the effort they have put in to keep it elevated. Today's market is about the US dollar continuing to be the reserve currency and all the risk of geopolitics and so on. I believe making boatloads of money is secondary because they already have all they need and is more about control and power.
> 
> If the game is over we may see any tool used that could crash the market if it is in their interest to retreat or go in a new direction.


 I was keeping an eye on the price pattern in silver which was forming a parabolic arc that was quickly running out of time. For some stupid reason I froze, My plan was to buy out of the money puts with enough time to allow the crash to happen. One look @ the chart & those that understand parabolic arcs knew it was going to crash. After I missed a huge money making opportunity in the dow transports in 1989 after they crashed from forming a parabolic arc. I promised myself if I seen a parabolic arc forming in a stock index or metals market with very little time left before it was broken I would short come hell or high water. I failed 

The recent July 10 high the large speculators were net long to a degree that exceeded their net position @ the April 2011 high.


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## lonewolf (Jun 12, 2012)

humble_pie said:


> to the best of my knowledge the market makers always stand ready to buy at their posted price.
> 
> in very extreme cases (tripping the breakers), stock exchanges will be temporarily & automatically shut down. This has already happened a few times since the circuit breakers were introduced.
> 
> ...



Humble

page 200 of Conquer the Crash by Robert Prechter latest edition (verbatim)

I recall only one time when authorities banned buying in a bull market. The Comex futures exchange banned orders "to open" in silver futures in January 1980 to save their own skins, since many exchange members were short. Most investors were long, so their only allowed course was to sell. By changing the rules, the exchange profited & investors got killed. ( For more on that story, read Silver Bonanza, by James Blanchard & Franklin Sanders, published by Jefferson Financial, 2400 Jefferson Highway, Suite 600, Jefferson, LA 70121, phone 504-837-3033)


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## dogcom (May 23, 2009)

Lonewolf the 2011 silver parabolic spike along with the hammers was a classic top and easy money short sell event. I figured if it got really close to the old $50 high that would provide a great opportunity to short it. Not only that but my wife said about a week before the high that someone at work gave here a tip to buy silver and I told her at the time I was thinking of shorting it. The person at her work said I was crazy to short it and should be buying it. I can tell you that I have been wrong on many things here and so on but that one was an easy one especially when the uneducated are climbing aboard and trumpeting it out loud. An opportunity like that one does not come along very often.


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## Rusty O'Toole (Feb 1, 2012)

The Hunt brothers were buying silver as an inflation hedge. Why silver? Because at that time it was illegal for Americans to buy gold.

They were buying futures contracts and taking delivery. This ran the price up, so a lot of speculators went short. But the Hunts kept on buying, resulting in a short squeeze. So the exchange changed the rules to protect the speculators and freeze out the Hunts.

This was not the first time or the last that the exchanges changed the rules, or that markets were manipulated.

Have you ever heard of Quantitative Easing? This was done repeatedly to stimulate the stock market and hold down interest rates. This is no conspiracy theory, it is in a hundred Fed statements published in financial papers around the world for the last 5 years.

You can lay a ruler on the chart of the S&P for the last 5 years as it goes straight up. Every time it dipped, another round of QE was announced, or Operation Twist which got at the same result in a different way.

So, what happens when QE ends? They announced that they were going to start "tapering" a year ago and have been doing so, with little shots of buying when the market dipped.

Anyone who doesn't believe the stock markets and bond markets are being deliberately manipulated by the Fed simply hasn't been reading the financial pages.


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## lonewolf (Jun 12, 2012)

I think it was something like 10 years in prison for owning gold. I recently read that when Americans went into their safety deposit boxes they would check to see if gold was being stored in them. One of the reason some wealth preservation experts recommend holding some physical gold in Switzerland.

The investment banks i.e., Goldman package up securitized worthless garbage to sell to their clients then pay the rating agency for high ratings AAA. Government Sachs really knows how to play the game.

Everyone loves Buffet his Goldman crew & ratting agency, Even after White water everyone loves Hillory ??? The Fed is the hero of the day ???


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## Rusty O'Toole (Feb 1, 2012)

Wolfie old boy if you ever lived on a farm or used an old fashioned outhouse you know you can only pile **** so high before it topples over. Except in winter when it freezes.

Any Ponzi scheme must end when you run out of other people's money OR the stuff you are printing goes to zero. Every modern economy is a Ponzi scheme or a whole series of Ponzi schemes layered one on top of the other. There are constant small landslides as one scheme or another fails, and they have to run around and prop it up with more borrowed or printed money. 

Once in a while a whole sector of the economy will slide down hill at once, sometimes the stock market, sometimes real estate, sometimes something else.

Then there is a frantic scramble to stop the whole shaky edifice from collapsing.

How long can they keep this up? Don't ask me, I am astonished the whole thing didn't come down like a house of cards years ago. But somehow they manage to McGyver it enough to keep their wealth and power.


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## lonewolf (Jun 12, 2012)

confidence

When the fractal cycles of optimism & pessimism are promoting a large wave in optimism. The degree in the confidence & the size of the house of cards will be in direct proportion to the amount of optimism. Most have not taken Newtons law far enough to that of cycles @ some point the tide will go out.


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## Pluto (Sep 12, 2013)

For what it is worth, in 1974 Americans were again permitted to own gold. But the Hunt brothers, sometimes referred to as Dumb and Dumber, continued their silver acquisitions. Apparently they underestimated the amount of silver for as the price rose, sterling come out of the woodwork every where. There were lineups at precious metals dealers with people selling their silverware, and sterling tea sets. around the time of the peak price, there seemed to be an endless supply of silver. The average Joe with sterling made a killing selling family heirlooms, while the pros, the Hunts, got creamed. I have no idea why the Hunts continued with silver even after they could buy Gold. 

But as to the original topic, I'm not sure the fed or other big boys, want crashes. I think, at least, they try to eliminate extremes, and perhaps they have the dream of eliminating economic and market cycles. If so, they have failed and will likely continue to fail. By trying to reduce extremes on the upside, it seems they just precipitate a crash sooner than it would otherwise happen. Similarly on the downside. Even without intervention, it seems extremes will happen anyway. As far as I know, for example, the tulip bulb craze was not interfered with by any agency, yet it rose, and crashed. Buy and hold investors got creamed. So I don't think fed or other intervention has or will, eliminate extremes in they cycles. It seems to be human psychology, not value, that drives markets at the extremes, and the fed can't change human psychology.


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## Nemo2 (Mar 1, 2012)

^ I recall the almost daily full page ads in the Toronto newspapers at the time offering to buy silver.


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