Stock Markets Exposed
Do big money managers manipulate the stock market?
The stock market has been acting peculiar lately. It reached Dow 14,000 and didn't stay there. Three weeks later it hit Dow 12,500...and didn't stay there. Within minutes it shot up 300 points to 12, 800. Now it's stuck in the middle, edging higher until it gets to another parameter, and maybe will do the same thing again. This can't be ordinary investors and traders. I believe it's been established by those people who control a lot of stock and buy and sell for the many different funds. Good news or bad news (and there's lots of bad news lately), doesn't seem to affect the stock market as much as these wild gyrations according to parameters. Agree?
Public Comments
- there have been explanations for the market volitility that I found plausible. you used the word manipulation, which I think of in this context as an intent to gain advantage by controlling enough of the market to artificially raise or lower prices and then exploit that difference. I doubt the volume money managers are doing that, as there is a wealth of information about what they are doing and it would be reported promptly. If its any consolation, the hunt brothers tried to corner the market on silver a long time ago and they got burned pretty good if memory serves me correctly. The market gets weird when people don't know what to expect. One thing I read last week was that the market had been waiting for the fed to talk about a rate decrease, and it bounced around a while until they finally said the magic words. now its hurricane season again and the energy futures are getting expensive. lets see what that does. If we all knew the market was going up every year and by how much, it would be instantly captured in futures trading and there would be nothing to wonder about :)
- No. Money managers respond to the news just like small investors. Though they see it sooner and have more detailed information available. They also have the ability to call the company and get clarification. The difference is that their buy/sell decisions involve much larger volumes which has a more pronounced effect on the price. Since they often can not make the desired trade in one trade, it is broken into several which produces a laddering effect. Money managers and corporate insiders do at times manipulate a single stock. When that happens they risk getting sued or going to jail. The SEC, lawyers, and large investors are watching.
- A little bit. I am not an expert by any means but for example if you check the top 10 holdings of several US stock (growth or income) funds you will see Exxon Mobil for example. If many money managers buy this stock of course its price increases and since they are an institution investor they have much more money and less expenses than an individual so they can buy up more shares. There are other smaller "tricks" and others I am ignorant of but people like the Fed and big/influential mutual fund companies and/or money managers have quicker access to a company's most recent financial reports, executives, etc. and can make better projections which affect stocks in the meantime. This is not unethical insider trading stuff either but a cause and effect type of thing. However in the short term (days to months) the stock market makes as much sense as reading a book backwards, in the dark and through a kaleidoscope. My $0.02
