# Pure manipulation... how are we supposed to invest?



## MoreMiles (Apr 20, 2011)

The markets are not following any earning or basic supply-demand rule... The price is from pure manipulation by the big investment banks and fund managers.

LNKD, with PE of 1900x, went up 5.5% today. GOOG, with PE of 19x, went down 1.4%... does that even make sense? ORCL announced good earning, then stock plunged after hour.

Then look at the sudden 1% increase at 3pm today from HFT Dow went from -150 to 0 within 30sec! Due to fake Greek headline "Greece Agrees on Austerity Plan With EU" released to move the market. No, the vote is not until next week! So that was simply the plan, yet to happen... Austerity Plan is requested and needs to be passed in the parliament. So how is Greece different today from yesterday? The problem is still there. That headline was a pure lie!

With these manipulators... the stock market is really becoming a casino. You go to sleep then to find out your portfolio dropped 1.5% overnight while you were sleeping. The stop loss kicks in, then they rebound back to 0%, getting more suckers to buy in, rinse and repeat.

Is it me or is it really different now? I don't remember stock markets acting like this about 10 years ago...


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## ddkay (Nov 20, 2010)

It's pretty much come down to who can publish junk through the newswires (almost anyone) and who can parse/validate/trigger off those headlines fast enough (almost anyone). The result is a violently indecisive market, but it still usually trades within range. I think we need a few more down days, but eventually the support levels will get taken out. Then the indices will look like a waterfall. The only reason I can think of the market to go up is if the US agreed to lift its debt ceiling and people in Greece stopped protesting against a bailout.

Yesterday 3000 nurses showed up on Wall Street. "To remedy the budget crisis and its impact on Americans, organizers are pushing for a small fee on the trading of bonds, options, credit default swaps, futures, and derivatives to save crucial social programs from falling victim to the impact of Wall Street’s missteps. Organizers say the tax could generate $350 billion a year." Good idea? Bad idea?


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## donald (Apr 18, 2011)

Im far from a analist,and im not going to pretend to know anymore than i do,which is probably close to zero,but i think were in for a rough patch and the tipping point is close,so many people lost half there portfolios a couple yrs ago and nobody has it in them for that to happen again,the jobless data thats came out,and ben and the feds looking like beaten dogs(guy cant even look the american people in the eye barely in press confrences)Obama and the hope machine are scrambling and there (q) tactic for recovery looks now like a disaster.

And retail investors will not take one for america again=selloffs,dont think were there yet but a couple more weeks and a few more negitive news stories,but than again im just a joe scmoe,with that being said maybe were in for an epic rally.I read today something like 1/9 americans are still being issued food stamps,that ratio hasnt been seen since the 30s,ironicly washington dc is one of the highest states in the data.Not good!!


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## ChrisR (Jul 13, 2009)

How are you supposed to invest in a market like this? Simple, identify companies that you feel have solid fundamentals and you feel confidant holding for decades. Buy in, and ignore day to day price fluctuations for the next 20 years!

Somehow, I suspect that simple answer was not what you were looking for.


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## KaeJS (Sep 28, 2010)

If you're not doing what ChrisR said above, then you need to be trading and following the trend.

If you're in the middle - you're getting creamed.

Stop Losses do not work well in this type of a market. It is too sensitive right now. You cannot place a stop loss when the markets are erratic.

Either hold out for the long term, or play the trends.

I am holding out for the long term.


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## cannew (Jun 19, 2011)

I only watch the market to see if it's down far enough. That's when those great dividend growers go on sale and I can buy at great valuations. All the rest is just interesting to watch and listen to the tv comments.


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## andrewf (Mar 1, 2010)

Trendfollowing doesn't require you to be constantly following the market. You can do it with as little as one evening a month.


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## MoreMiles (Apr 20, 2011)

Less than 24 hours, now CNBC announced: "European Banks Scrambling to Prevent Default by Greece" 

Wasn't the problem gone yesterday so the markets shoot up 1% after that news? Now they are making this... the opposite news?! 

So these big boys are playing the market, buying and shorting, all within 24 hours.... They should really be held accountable for releasing fake news to the markets!


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## larry81 (Nov 22, 2010)

if you cant stomach the volatility, don't invest in stock


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## sags (May 15, 2010)

The Greeks called the banker's bluff.......and now the bankers are scrambling.

It isn't about "austerity" packages now. It is about the banks saving their own butts.

I think there is a lot more "risk" to the banks, than they have admitted.

There are those derivatives........in an amount determined to be "unknown".


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## Larry6417 (Jan 27, 2010)

MoreMiles said:


> The markets are not following any earning or basic supply-demand rule... The price is from pure manipulation by the big investment banks and fund managers.
> 
> Is it me or is it really different now? I don't remember stock markets acting like this about 10 years ago...


So you don't remember the internet bubble, the Asian currency crisis, Long Term Capital Management, Enron, or Argentina's default on its national debt? 

_Where Are the Customers' Yachts?_ is the classic satire of Wall Street lies and manipulation. It was published in 1940 based on the author's experiences in the 1920s and 30s. The market hasn't changed that much. I'm not saying there's no market manipulation. I'm saying there's always been some. If anything it's harder for one firm to control the market now.


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## Mockingbird (Apr 29, 2009)

MoreMiles said:


> Is it me or is it really different now? I don't remember stock markets acting like this about 10 years ago...


Nothing's changed IMHO. The volatility in the market comes and goes. Perhaps you're more wiser now to be able identify the market nuances that you haven't noticed before. Forget about this intraday market gyration if you're an investor. 

MB

PS: By the way, DOW swung 125pts in 20mins or so. Eternity for some traders.


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## sleek (May 13, 2009)

Warren Buffett once put his finger on what's stupid about buying a stock and then putting in a stop-loss order. To paraphrase him, it's akin to buying a house for $200,000 and then instructing your broker to accept the first offer that comes in below $180,000.


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## Financial Cents (Jul 22, 2010)

cannew said:


> I only watch the market to see if it's down far enough. That's when those great dividend growers go on sale and I can buy at great valuations. All the rest is just interesting to watch and listen to the tv comments.


Well said.

I'll add some more....

The markets have always been a mess. There will always be lots of noise. There is always a war going on, a crisis, an environmental disaster to attend to, as sad as some of these events are. Maybe some investors are noticing it more now because the noise is getting louder and/or more people are listening to it, I dunno.

In the end, for buy and holders who enjoy purchasing broad-market ETFs or dividend-paying companies at good prices and never selling these products, these are actually good times. Maybe I'm crazy, but I honestly feel this way. I would be more concerned if the Dow Jones was rocketing to 15,000 this summer, now that would be nuts.


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## webber22 (Mar 6, 2011)

If the OP had read past the headlines - CNBC ones at that  - he would have understood that the headlines were slightly twisted....


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## Belguy (May 24, 2010)

The second half of the year will be better than the first half and so just relax!!


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## Four Pillars (Apr 5, 2009)

sleek said:


> Warren Buffett once put his finger on what's stupid about buying a stock and then putting in a stop-loss order. To paraphrase him, it's akin to buying a house for $200,000 and then instructing your broker to accept the first offer that comes in below $180,000.


That's not how a stop-loss order works.


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## Assetologist (Apr 19, 2009)

There is always noise in the marketplace. If you mistake it for signal you will lose as there will be somebody with faster access to the means to advantage from the noise. 

The longer I play the game the more I am convinced the only sub-game in which 'retail' investors have an advantage is exactly what Several others have described -- hold cash to buy the very best businesses when their stock goes on sale. 

I have made very few real purchases since the spring of 2009. Every so often my trigger figure gets antsy so I play a trade every few weeks or so but this is not with my 'real money' rather with my hobby/play money. The other advantage of a soft market is that the steady dividends of these few great companies by even more shares.

My thoughts.


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## dogcom (May 23, 2009)

Sell in May and go away is simple but it does seem to work a lot of the time.

The market is full of garbage money from the Fed pushing the hottest things or whatever and when that tap stops or slows so does the hottest things or whatever everyone has been after.

We are in a credit crisis that has gone on since 2007 and has been pumped up by central banks around the world. So whenever we think about turning off or down the pumps the crisis will pop up again. We need to get debt back under control in the world so people can start buying and borrowing again.


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## Cal (Jun 17, 2009)

"The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable." Warren Buffett


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## Jon_Snow (May 20, 2009)

Jumped the gun a bit and sold in March and went away, and I am very happy with the decision.


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## cannew (Jun 19, 2011)

I started a post "What do your consider a reasonable return". Many are suggesting that 6-7% should be the most you can expect. That fine and the index's agree with that.

But if you stick with solid dividend paying\growing companies, and buy only when the market takes a down turn you should be able to get 4-6% on the dividend alone. After that who cares about the ups and downs, you'll make the 4-6% and probably more when they increase the dividend.

Why would you ever want to sell as your income can only go up and at some point exceed the 10% average of the market.


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## fatcat (Nov 11, 2009)

*Value does not exist outside mankind's consciousness.*

http://www.zerohedge.com/article/max-keiser-and-sandeep-jaitly-explain-why-modern-economics-rubbish


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## webber22 (Mar 6, 2011)

cannew said:


> ....But if you stick with solid dividend paying\growing companies .....


This is easier said than done, and a lot of people mess this up rather easily. I can think of companies that were considered growing, but a few years later they were lower valued and sometimes with a reduced dividend. Names like Sunlife, Husky, Manulife come to mind. CIBC was at $100 4 years ago, now down to $76, BMO still hasn't recovered to 2006 levels, the list goes on..... sure the dividend helps, but if you're losing capital it really doesn't mean that much


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## ddkay (Nov 20, 2010)

fatcat: Had to track down that quote

Principles of Economics by Carl Menger
CHAPTER III. THE THEORY OF VALUE


> Value is thus nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. *Hence value does not exist outside the consciousness of men*. It is, therefore, also quite erroneous to call a good that has value to economizing individuals a “value,” or for economists to speak of “values” as of independent real things, and to objectify value in this way. For the entities that exist objectively are al*ways only particular things or quantities of things, and their value is something fundamentally different from the things themselves; it is a judgment made by economizing individuals about the importance their command of the things has for the maintenance of their lives and well-being. Objectification of the value of goods, which is entirely subjective in nature, has nevertheless contributed very greatly to confusion about the basic principles of our science.


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## Homerhomer (Oct 18, 2010)

webber22 said:


> This is easier said than done, and a lot of people mess this up rather easily. I can think of companies that were considered growing, but a few years later they were lower valued and sometimes with a reduced dividend. Names like Sunlife, Husky, Manulife come to mind. CIBC was at $100 4 years ago, now down to $76, BMO still hasn't recovered to 2006 levels, the list goes on..... sure the dividend helps, but if you're losing capital it really doesn't mean that much


Once you identify what to buy, when to buy them is just as important.


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## Causalien (Apr 4, 2009)

Nobody uses stop losses nowadays after news of flash crash gets out. Nowadays, you BUY flash crashes to take advantage of stupid computer algorithms.

Stop losses have been replaced by conditional sells based on several inputs. We are in a transition so it's not in the mass market yet, maybe it'll never get there, but it's easy to filter out flash crashes. (Or filter in)


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## MoreMiles (Apr 20, 2011)

*Short attack by credit agency? Manipulation again?*

I don't understand how these "credit agencies" like Moody and S&P can release "warning" to drive down the market? They take turn one after another to drive down the stocks this week. Are they shorting the market? They should be investigated by SEC.

What qualifications do they have anyway? They are simply a company and not a country or United Nation. They are part of stock market... they were saved by QE bailout. Are they biting the hand that feeds them?

Also, how would Moody feel if there is a short-attack on them, let's say from Muddy Water Research? 

I think the government should shut them down. They should ask UN to create a neutral agency that is not part of the system for independent rating.

I am sick of these "agencies" coming out once awhile to grab attention.


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## ddkay (Nov 20, 2010)

They're private companies that get paid to give ratings... but to answer your question, it's not likely.

They aren't trying to drive down the market. They're just doing their job. If the U.S. government evaluated it's own credit worthiness, it wouldn't be anymore credible.


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## ddkay (Nov 20, 2010)

P.S. I agree there should be entities financially separated from the financial system to give ratings. E.g. Goldman Tax shouldn't be able to pay Moody's to put the US on downgrade review.


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## ddkay (Nov 20, 2010)

Check this out: SEC Proposes Rules to Increase Transparency and Improve Integrity of Credit Ratings


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## ddkay (Nov 20, 2010)

Great explanation I found from the baselinescenario.com

"People are worried about the legal-mechanical consequences of a downgrade — in particular, the requirements that some investors (money market funds, some other mutual funds, maybe pension funds and insurance companies) must invest some proportion of their assets in AAA securities. If, say, every money market fund suddenly has to dump all of its T-bills, that could cause systemic problems."

If the downgrade does result in another financial crisis, maybe it's time for Mister Market to rethink how its economy works...

Funny cynical comment, I enjoy reading these:
"Raising interest rates gives Wall Street more money. The debate is not about America, but about how much money can be siphoned in higher rates. And don’t forget hedge funds make money from uncertainty. Wall Street owns Washington."


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