The Stock Market

[midas]

Not all lies are created equal:

1) There is the lie to intentionally deceive for personal gains

2) There is the lie to intentionally limiting the "truth" because truth may lead to understanding which may reduce one's "edge" or "advantage".

3) There is the lie of ignorance - of just not knowing better

4) There is the lie of "benevolence" - to hide the real truth - because it may be unpalatable

When I read a recent comment in reply to my "p/c ratio" posting - I thought of "2" or "3".

When I hear Midas complaining of deceiving Government statistic - I thought of "4". Would the public really be better off to understand the total truth without "whitewashing statistics"? Would the "momentum" increase to "disaster ahead" or "green shoots" ahead?

When I read your post Abrak I agree - I think of "3" - there is so much ignorance available through commentators, television channels, misinterpretations etc. - yet "fundamental analysis" still has a large following - probably because of "2" and "3".

But that assumes the Government that decides " Would the public really be better off to understand the total truth "

is making that decision based wholy for altruistic reasons or for reasons that are later discovered as having been " sinister " and by then based on history its usually too late. Mr Kim in Pyong Yang told me this

Edited July 24, 2010 by midas

[Parvis]

But that assumes the Government that decides " Would the public really be better off to understand the total truth "

is making that decision based wholy for altruistic reasons or for reasons that are later discovered as having been " sinister " and by then based on history its usually too late. Mr Kim in Pyong Yang told me this

Midas

Yes, I am assuming a Government "by the people and for the people" with "Checks and Balances". And even while I am saying this - I feel uneasy. But not all lies are meant to be "sinister Manipulations" and some truthfull words/actions are truly self-defeating.

Personally I would prefer to know the truth - however even without being told the truth I/we can very often "deduce" fact from fiction.

This is not a perfect World as much as we hope it to be - but "One man (woman) can make a difference - and every man (woman) should try".

[Abrak]

I assume whoever wrote it is a non believer in government statistsics

The Chinese economy might have been booming from building all those ghost cities and

bridges in the middle of nowhere that Hugh Hendry captured on film but

they have not yet worked out how to a earn a

return on those " investments " or who is going to actually use them ?

Yes but at some point these sort of arguments becoming self defeating. The Chinese economy might be statisitcally booming because the economy is building and investing in assets that will bring no return in the future. So inherently you are not surprised that the stockmarket goes down if people are worried about ROI or underlying asset inflation, competitiveness that implies a lack of productivity.

The same arguments can simply be placed on the US economy. The stockmarket was very high and it halved and now it is still 30% or more off its highs. What has changed that much. When the economy was 'booming' and house prices were 'rising' surely the ROI inherent in a debt fueled property economy suggested that the boom was rather fake and the rise in the stockmarket was rather fake as well as the rise in house prices. So I rather feel the US economy was already 'ill' when the stockmarket was 14,000 and the fact that there was a property bubble that imploded and a recession was hardly a big surprise.

To be honest, to imply the economy is 'deathly ill' and the stockmarket should be falling to '5000' also implies that everyone thought it was a brilliant productive and exciting economy when it was 14,000. I mean it is not as though the fundamentals of the market have 'massively' changed (although the financial crisis was a bit of a shocker.) I mean if you think that the building of houses when the market was massively oversupplied (and which resulted in economic growth), the concept of stopping building houses which causes economic decline is actually bullish for your expectations of house prices.

To a lot of people, a recession was necessary cure, rather than the problem. And all this fraud stuff is just nonsense. I might agree with the stockmarket is to high because recovery expectations are unrealistic, but it is hardly fraud. And all this stockmarket is a casino rubbish I could prove to you is just total rubbish.

Edited July 24, 2010 by Abrak

[lannarebirth]

No it is not.

Abrak, where do you get your economic indicators from?

Exactly.....

Are you referring to my comment that China is booming. I think I read it in a newspaper somewhere. Something along the lines that the economy grew 11% in Q1. Actually was just making a general point which is that I believe that the two worst performing stock markets in the world this year are Greece and China. I believe that Greece is suffering some sort of financial and economic problems while China is one of the fastest growing economies after Thailand.

I know the Chinese market has gone down because, occasionally some Chinese stocks now appear to pop up in value searches while beforehand they seemed to live exclusively in the world of overpriced crappy rubbish.

Are you doing scans of Indian markets too Abrak? That market bounced back hard, as did Thailand, and I don't really see too many impediments to continued growth there. I imagine it will be making new highs long before most other global markets.

[midas]

I assume whoever wrote it is a non believer in government statistsics

The Chinese economy might have been booming from building all those ghost cities and

bridges in the middle of nowhere that Hugh Hendry captured on film but

they have not yet worked out how to a earn a

return on those " investments " or who is going to actually use them ?

Yes but at some point these sort of arguments becoming self defeating. The Chinese economy might be statisitcally booming because the economy is building and investing in assets that will bring no return in the future. So inherently you are not surprised that the stockmarket goes down if people are worried about ROI or underlying asset inflation, competitiveness that implies a lack of productivity.

The same arguments can simply be placed on the US economy. The stockmarket was very high and it halved and now it is still 30% or more off its highs. What has changed that much. When the economy was 'booming' and house prices were 'rising' surely the ROI inherent in a debt fueled property economy suggested that the boom was rather fake and the rise in the stockmarket was rather fake as well as the rise in house prices. So I rather feel the US economy was already 'ill' when the stockmarket was 14,000 and the fact that there was a property bubble that imploded and a recession was hardly a big surprise.

To be honest, to imply the economy is 'deathly ill' and the stockmarket should be falling to '5000' also implies that everyone thought it was a brilliant productive and exciting economy when it was 14,000. I mean it is not as though the fundamentals of the market have 'massively' changed (although the financial crisis was a bit of a shocker.) I mean if you think that the building of houses when the market was massively oversupplied (and which resulted in economic growth), the concept of stopping building houses which causes economic decline is actually bullish for your expectations of house prices.

To a lot of people, a recession was necessary cure, rather than the problem. And all this fraud stuff is just nonsense. I might agree with the stockmarket is to high because recovery expectations are unrealistic, but it is hardly fraud. And all this stockmarket is a casino rubbish I could prove to you is just total rubbish.

" And all this stockmarket is a casino rubbish I could prove to you is just total rubbish."

Ok i would like to listen to your side of the argument but preferably by explaining why you would disagree with MSNBC host Dylan Ratigans when he says sthe stock market is " an obviously corrupt fraud "

"The stock market at this point, which used to be a reflection of the future value of actual businesses in this country, has been turned by our government and our banks into little more than a paper shredding facility [about which] we can make up reasons why it goes up and down," Ratigan said. " But when the computers ... at the banks are controlling the action, most everything else is kind of silly."

http://rawstory.com/rs/2010/0630/ratigan-stock-market-obviously-corrupt/

Edited July 24, 2010 by midas

[Abrak]

No it is not.

Abrak, where do you get your economic indicators from?

Exactly.....

Are you referring to my comment that China is booming. I think I read it in a newspaper somewhere. Something along the lines that the economy grew 11% in Q1. Actually was just making a general point which is that I believe that the two worst performing stock markets in the world this year are Greece and China. I believe that Greece is suffering some sort of financial and economic problems while China is one of the fastest growing economies after Thailand.

I know the Chinese market has gone down because, occasionally some Chinese stocks now appear to pop up in value searches while beforehand they seemed to live exclusively in the world of overpriced crappy rubbish.

Are you doing scans of Indian markets too Abrak? That market bounced back hard, as did Thailand, and I don't really see too many impediments to continued growth there. I imagine it will be making new highs long before most other global markets.

I do scan stocks on Indian markets but I really only trade Thailand, so to the extent I look at these scans and include other countries I only do it because I wish to learn more about underlying Thai stocks rather than actually buy stocks in other markets. If you dont understand a market, value scans arent much good on the basis that if you buy on that basis you usually simply end up finding out why they were cheap in the first place.

As a general comment though I dont usually see a lot of Indian stocks under value parameters. In particular their price to book is always say 2.5-3.0x which is way off line to me (say Thailand is about 1.5x and average ROE is 13%). ROE in India is not special. It may be down to accounting rules. South Korea seems to have low valuations but no idea why.

[Abrak]

I assume whoever wrote it is a non believer in government statistsics

The Chinese economy might have been booming from building all those ghost cities and

bridges in the middle of nowhere that Hugh Hendry captured on film but

they have not yet worked out how to a earn a

return on those " investments " or who is going to actually use them ?

Yes but at some point these sort of arguments becoming self defeating. The Chinese economy might be statisitcally booming because the economy is building and investing in assets that will bring no return in the future. So inherently you are not surprised that the stockmarket goes down if people are worried about ROI or underlying asset inflation, competitiveness that implies a lack of productivity.

The same arguments can simply be placed on the US economy. The stockmarket was very high and it halved and now it is still 30% or more off its highs. What has changed that much. When the economy was 'booming' and house prices were 'rising' surely the ROI inherent in a debt fueled property economy suggested that the boom was rather fake and the rise in the stockmarket was rather fake as well as the rise in house prices. So I rather feel the US economy was already 'ill' when the stockmarket was 14,000 and the fact that there was a property bubble that imploded and a recession was hardly a big surprise.

To be honest, to imply the economy is 'deathly ill' and the stockmarket should be falling to '5000' also implies that everyone thought it was a brilliant productive and exciting economy when it was 14,000. I mean it is not as though the fundamentals of the market have 'massively' changed (although the financial crisis was a bit of a shocker.) I mean if you think that the building of houses when the market was massively oversupplied (and which resulted in economic growth), the concept of stopping building houses which causes economic decline is actually bullish for your expectations of house prices.

To a lot of people, a recession was necessary cure, rather than the problem. And all this fraud stuff is just nonsense. I might agree with the stockmarket is to high because recovery expectations are unrealistic, but it is hardly fraud. And all this stockmarket is a casino rubbish I could prove to you is just total rubbish.

" And all this stockmarket is a casino rubbish I could prove to you is just total rubbish."

Ok i would like to listen to your side of the argument but preferably by explaining why you would disagree with MSNBC host Dylan Ratigans when he says sthe stock market is " an obviously corrupt fraud "

"The stock market at this point, which used to be a reflection of the future value of actual businesses in this country, has been turned by our government and our banks into little more than a paper shredding facility [about which] we can make up reasons why it goes up and down," Ratigan said. " But when the computers ... at the banks are controlling the action, most everything else is kind of silly."

http://rawstory.com/rs/2010/0630/ratigan-stock-market-obviously-corrupt/

To be honest Midas, when cash is yielding nothing and people will print if necessary then values of virtually everything are going to be high. UST dollar ten year bonds yielding 3%. Explain to me how that is a good investment to start with. Or cash yielding nothing. Or buying gold after it has gone up 5x and is totally non-productive. So I do not believe say the US stockmarket is inherently cheap but find me something that is.

As to why stockmarkets are not a casino. Take the SET and choose a period whereby it hasnt done much. Then take 5 stocks. Buy them when volume (as defined by value is low as opposed simply the number of shares). Sell them when volume is high. You will make money. The fact that volume is very high when the price is very high leads you to believe there are many gamblers - hence a casino. But sellers match buyers, so the fact that there are lots of sellers when a price has gone up 3 fold is not surprising - the fact that there are lots of buyers indicates there are lots of gamblers - hence your view of a casino.

But in a casino you can only make money generally by being lucky. While I have shown you how to make money by merely being sentient and knowing nothing. If you could spell as well you could probably do even better.

Edited July 24, 2010 by Abrak

[zorro1]

Abrak I must say its very enjoyable reading your posts you certainly have a way with words. You put into perspective the difference between a casino and the markets. Even Midas may begin to comprehend it. Generally your summary of a healthy economy = healthy market would hit a raw nerve with bullish investors at 14,000 and/or stale bulls selling at 6500. Clearly the majority still buy high ,sell low especially on media hype . Midas's theory would certainly have him buying/selling in this manner if he were a player. Your view on cash makes total sense

had to look this one up. "Sentience "is the ability to feel or perceive. The term is used in science and philosophy, and in the study of artificial intelligence

Edited July 24, 2010 by zorro1

[PCA]

Abrak I must say its very enjoyable reading your posts you certainly have a way with words. You put into perspective the difference between a casino and the markets. Even Midas may begin to comprehend it. Generally your summary of a healthy economy = healthy market would hit a raw nerve with bullish investors at 14,000 and/or stale bulls selling at 6500. Clearly the majority still buy high ,sell low especially on media hype . Midas's theory would certainly have him buying/selling in this manner if he were a player. Your view on cash makes total sense

had to look this one up. "Sentience "is the ability to feel or perceive. The term is used in science and philosophy, and in the study of artificial intelligence

seconded, lots of ingenious posts.

[Abrak]

Abrak I must say its very enjoyable reading your posts you certainly have a way with words. You put into perspective the difference between a casino and the markets. Even Midas may begin to comprehend it. Generally your summary of a healthy economy = healthy market would hit a raw nerve with bullish investors at 14,000 and/or stale bulls selling at 6500. Clearly the majority still buy high ,sell low especially on media hype . Midas's theory would certainly have him buying/selling in this manner if he were a player. Your view on cash makes total sense

had to look this one up. "Sentience "is the ability to feel or perceive. The term is used in science and philosophy, and in the study of artificial intelligence

Sentience merely implies you are a human being who isn't dead.

To be honest Zorro my point is that the stockmarket is not a casino it is not a market for the 'priveged elite and investment banker' nor do you have to have an above average IQ to actually make money.

If you take a look at this....

http://investing.businessweek.com/businessweek/research/stocks/snapshot/snapshot.asp?ticker=STA:TB

This stock has gone up 10x it's volume has gone up 1000x. It is current on 2x bv, 6.7x earnings and a dividend yield of 3%, so imagine how ridiculously cheap it must have been. Now it is trading 50m shares a day. It's profits are dependent on the rubber price which peaked 3 months ago, 5 directors have been selling shares, the volume is ridiculously high. So I have sold. So it would appear to me that if there are lots of buyers as there are now, they are clearly gambling and are likely to lose. Obviously it is logical there are lots of sellers. This has required no intelligence whatsoever. I could claim that if I had bought at the lows but it had more than doubled was on 2x earnings and with a yield of 15%.

Obviously this is an extreme example but my point is, you simply don't need to gamble, you don't need to be smart and the whole isntnrigged for the benefit of the privileged few.

[lannarebirth]

Abrak I must say its very enjoyable reading your posts you certainly have a way with words. You put into perspective the difference between a casino and the markets. Even Midas may begin to comprehend it. Generally your summary of a healthy economy = healthy market would hit a raw nerve with bullish investors at 14,000 and/or stale bulls selling at 6500. Clearly the majority still buy high ,sell low especially on media hype . Midas's theory would certainly have him buying/selling in this manner if he were a player. Your view on cash makes total sense

had to look this one up. "Sentience "is the ability to feel or perceive. The term is used in science and philosophy, and in the study of artificial intelligence

Sentience merely implies you are a human being who isn't dead.

To be honest Zorro my point is that the stockmarket is not a casino it is not a market for the 'priveged elite and investment banker' nor do you have to have an above average IQ to actually make money.

If you take a look at this....

http://investing.bus...p?ticker=STA:TB

This stock has gone up 10x it's volume has gone up 1000x. It is current on 2x bv, 6.7x earnings and a dividend yield of 3%, so imagine how ridiculously cheap it must have been. Now it is trading 50m shares a day. It's profits are dependent on the rubber price which peaked 3 months ago, 5 directors have been selling shares, the volume is ridiculously high. So I have sold. So it would appear to me that if there are lots of buyers as there are now, they are clearly gambling and are likely to lose. Obviously it is logical there are lots of sellers. This has required no intelligence whatsoever. I could claim that if I had bought at the lows but it had more than doubled was on 2x earnings and with a yield of 15%.

Obviously this is an extreme example but my point is, you simply don't need to gamble, you don't need to be smart and the whole isntnrigged for the benefit of the privileged few.

Nice work, and you know what? It might go higher. Possible bullish flag or falling wedge on decreasing volume.

[midas]

I assume whoever wrote it is a non believer in government statistsics

The Chinese economy might have been booming from building all those ghost cities and

bridges in the middle of nowhere that Hugh Hendry captured on film but

they have not yet worked out how to a earn a

return on those " investments " or who is going to actually use them ?

Yes but at some point these sort of arguments becoming self defeating. The Chinese economy might be statisitcally booming because the economy is building and investing in assets that will bring no return in the future. So inherently you are not surprised that the stockmarket goes down if people are worried about ROI or underlying asset inflation, competitiveness that implies a lack of productivity.

The same arguments can simply be placed on the US economy. The stockmarket was very high and it halved and now it is still 30% or more off its highs. What has changed that much. When the economy was 'booming' and house prices were 'rising' surely the ROI inherent in a debt fueled property economy suggested that the boom was rather fake and the rise in the stockmarket was rather fake as well as the rise in house prices. So I rather feel the US economy was already 'ill' when the stockmarket was 14,000 and the fact that there was a property bubble that imploded and a recession was hardly a big surprise.

To be honest, to imply the economy is 'deathly ill' and the stockmarket should be falling to '5000' also implies that everyone thought it was a brilliant productive and exciting economy when it was 14,000. I mean it is not as though the fundamentals of the market have 'massively' changed (although the financial crisis was a bit of a shocker.) I mean if you think that the building of houses when the market was massively oversupplied (and which resulted in economic growth), the concept of stopping building houses which causes economic decline is actually bullish for your expectations of house prices.

To a lot of people, a recession was necessary cure, rather than the problem. And all this fraud stuff is just nonsense. I might agree with the stockmarket is to high because recovery expectations are unrealistic, but it is hardly fraud. And all this stockmarket is a casino rubbish I could prove to you is just total rubbish.

" And all this stockmarket is a casino rubbish I could prove to you is just total rubbish."

Ok i would like to listen to your side of the argument but preferably by explaining why you would disagree with MSNBC host Dylan Ratigans when he says sthe stock market is " an obviously corrupt fraud "

"The stock market at this point, which used to be a reflection of the future value of actual businesses in this country, has been turned by our government and our banks into little more than a paper shredding facility [about which] we can make up reasons why it goes up and down," Ratigan said. " But when the computers ... at the banks are controlling the action, most everything else is kind of silly."

http://rawstory.com/rs/2010/0630/ratigan-stock-market-obviously-corrupt/

To be honest Midas, when cash is yielding nothing and people will print if necessary then values of virtually everything are going to be high. UST dollar ten year bonds yielding 3%. Explain to me how that is a good investment to start with. Or cash yielding nothing. Or buying gold after it has gone up 5x and is totally non-productive. So I do not believe say the US stockmarket is inherently cheap but find me something that is.

As to why stockmarkets are not a casino. Take the SET and choose a period whereby it hasnt done much. Then take 5 stocks. Buy them when volume (as defined by value is low as opposed simply the number of shares). Sell them when volume is high. You will make money. The fact that volume is very high when the price is very high leads you to believe there are many gamblers - hence a casino. But sellers match buyers, so the fact that there are lots of sellers when a price has gone up 3 fold is not surprising - the fact that there are lots of buyers indicates there are lots of gamblers - hence your view of a casino.

But in a casino you can only make money generally by being lucky. While I have shown you how to make money by merely being sentient and knowing nothing. If you could spell as well you could probably do even better.

As far as US markets are concerned , call it a casino or a rigged market or whatever you like but at a time when many of the retail investors have now left the scene, ICI is saying the week ended July 14th saw the 11th sequential (and massive) outflow from domestic equity mutual funds of $3.2 billion. This brings the July total to $7.3 billion, and year-to-date equity outflows to a stunning $37.5 billion. “

To me it looks just like the artificially propped up housing market and to prevent stock prices from falling, the big banks will basically buy up everything (with the backing of the US government) and keep it in a 'shadow' inventory to try to entice the greedy sheeple remaining in the game.

[Abrak]

Nice work, and you know what? It might go higher. Possible bullish flag or falling wedge on decreasing volume.

Errrr yes good point. Even on the fundamentals, 2Q results are going to be very good EPS Bt2 for 1H, the company is planning to list on the Singapore stock exchange and it isnt expensive. The chart is rather misleading in that it sort of implies there is some sort of short term correlation between fundamentals and a share price (which I specifically argued there wasnt about one page ago) and that spectacular returns can be achieved in the short term with out any luck just by volumes going up and a brief look at fundamentals.

First of all I believe that a stock and a stockmarket have very little correlation to their underlying fundamentals in the short term but close to 100% correlation over the longer term (say at some point in the next two to three years.) So (1) I got lucky with the timing of the buy in that stock went up immediately (2) I also got lucky to an extent with the fundamentals (in that they did improve). When I said I sold, I merely said why I sold (and quite frankly why I dont give a toss whether the price goes up from here) rather than I believed that all those buyers would definitely lose money.

Still given its 10 fold rise, it is inherently more likely that the sellers know what they are doing better than the buyers. Although I will readily admit after any ten fold rise you are likely to have a lot of sellers (even from Directors) just because the stock has gone 'up' rather than it is necessarily overvalued.

Naam who is a sophisticated investor doesnt realize is that when he calls stockmarkets a casino, it is because a lot of punters are gamblers which must mean he would have a competitive advantage. He claims the fundamentals are more volatile which they are but he should admit that if he can get excess returns out of stable fundamentals then it would be far easier for him to get returns out of more volatile fundamentals and investing against gamblers.

The inherent value of a stock is not random, so to the extent anyone wishes to argue that share prices are random and therefore a gamble, they are merely admitting to not knowing the inherent value better than the market (which in equities which are subject to collective stupidity either at highs or lows) is setting the bar very low.

Midas calls it a casino because it doesnt understand investment philosophy and thinks like a gambler. He however does have the intelligence to realise that as things dont go his way of thinking, everything is either rigged or a gamble. While Midas has the mentality of a gambler he has the sense to conclude not to gamble. I dont know if Midas has a mental block about investment philosophy but simply doesnt get that one of the most important parts is being counter-intuitive

His previous post indicating retail have been selling and the market hasnt gone down, is an assumption that retail actions are a good indication of market movement and therefore it is all rigged. And Midas as sellers must equal buyers then to the extent domestic equity funds have been sellers then clearly professional investors have been buyers. Doing the exact opposite of retail investors is usually very sensible, so most people would conclude that when the market doesnt go down with retail selling, it may well be a market that is undervalued rather than rigged. As you say there is a degree to which the market is a casino and that usually involves betting against the gamblers. One thing you can absolutely guarantee is that they will be buying at the top.

And the whole point is this, to the extent you believe a lot of your arguments imply you think the market is rigged, there are loads of people on this thread who will simply tell you that you are not thinking straight from an investment perspective. If you say that the economy is doing badly so the market should go down that is totally irrational. If you believe that retail selling must result in the market going down, it implies you have the same mentality as them. If you say everyone is bearish so the market will go down again it is totally irrational. When things arent as you think they should be, the first thing you should question is your thinking. The market is often wrong but conspiracy theories require a degree of competency that there is very little evidence that it actually exists. The best opportunities exist when you think straight and the market doesnt. And just think about it, if you think that everything should go down, then you are really simply stating the value of cash should go up which considering its fundamentals is quite optimistic. And if your thinking is that absolutely everything should go down except for gold, then you might understand why I am not particularly optimistic on gold. And if you wish to say that simply proves my point because gold has been going up for the last 8 years then people will simply conclude that you are stupid.

[Abrak]

Finally Midas, you should consider how difficult it is to rig a market.

Last year the BoT tried to suppress the value of the baht and they got totally mullered. Which makes your theory on the economic numbers being a conspiracy to imply Thailand's fundamentals are not as good as they appear essentially a conspiracy of a conspiracy. If the US Government really wanted to get the market to go up they would be much better to appear to be deliberately trying to lower it in my view. If they shorted the market then people would jump all over them.

The BoT by shorting the baht have merely created the impression that if they had not shorted it, it would be a lot higher, which I do not believe is true. But very sensible investors believe that because they are so short and they know that some people who claim that the BoT were trying to prop up the baht are idiots. So if you really want to come up with a conspiracy theory on Thailands fundamentals, it was that they shorted the baht and overstated Thailand fundamentals to appreciate the baht by fooling people into thinking they were trying to stop it from rising.

The only problem would be a total lack of motive. In that it would be a massively complicated conspiracy which would require a degree of competency which is not reflected in the stupidity of the end goal.

[midas]

Nice work, and you know what? It might go higher. Possible bullish flag or falling wedge on decreasing volume.

Errrr yes good point. Even on the fundamentals, 2Q results are going to be very good EPS Bt2 for 1H, the company is planning to list on the Singapore stock exchange and it isnt expensive. The chart is rather misleading in that it sort of implies there is some sort of short term correlation between fundamentals and a share price (which I specifically argued there wasnt about one page ago) and that spectacular returns can be achieved in the short term with out any luck just by volumes going up and a brief look at fundamentals.

First of all I believe that a stock and a stockmarket have very little correlation to their underlying fundamentals in the short term but close to 100% correlation over the longer term (say at some point in the next two to three years.) So (1) I got lucky with the timing of the buy in that stock went up immediately (2) I also got lucky to an extent with the fundamentals (in that they did improve). When I said I sold, I merely said why I sold (and quite frankly why I dont give a toss whether the price goes up from here) rather than I believed that all those buyers would definitely lose money.

Still given its 10 fold rise, it is inherently more likely that the sellers know what they are doing better than the buyers. Although I will readily admit after any ten fold rise you are likely to have a lot of sellers (even from Directors) just because the stock has gone 'up' rather than it is necessarily overvalued.

Naam who is a sophisticated investor doesnt realize is that when he calls stockmarkets a casino, it is because a lot of punters are gamblers which must mean he would have a competitive advantage. He claims the fundamentals are more volatile which they are but he should admit that if he can get excess returns out of stable fundamentals then it would be far easier for him to get returns out of more volatile fundamentals and investing against gamblers.

The inherent value of a stock is not random, so to the extent anyone wishes to argue that share prices are random and therefore a gamble, they are merely admitting to not knowing the inherent value better than the market (which in equities which are subject to collective stupidity either at highs or lows) is setting the bar very low.

Midas calls it a casino because it doesnt understand investment philosophy and thinks like a gambler. He however does have the intelligence to realise that as things dont go his way of thinking, everything is either rigged or a gamble. While Midas has the mentality of a gambler he has the sense to conclude not to gamble. I dont know if Midas has a mental block about investment philosophy but simply doesnt get that one of the most important parts is being counter-intuitive

Abrak i dont have your ability to pretend that conditons in stock market trading are the same now compared to as they were before the Financial Crisis started. I dont believe the market was being dominated before by a handful of big players and that HFT computers were so much of a feature of the stock market as they are now ? But Max Keiser says it so much better than me.

His previous post indicating retail have been selling and the market hasnt gone down, is an assumption that retail actions are a good indication of market movement and therefore it is all rigged.

No I am saying is that if retailer investors are taking their money out of the stock market in droves as they appearto be doing based on ICI’s figures, then this cannot be a sign of confidence and who is left ? It looks a handful of very big players who are access to money at virtually no cost ? Hardly a healthy market ?

And Midas as sellers must equal buyers then to the extent domestic equity funds have been sellers then clearly professional investors have been buyers. Doing the exact opposite of retail investors is usually very sensible, so most people would conclude that when the market doesnt go down with retail selling, it may well be a market that is undervalued rather than rigged. As you say there is a degree to which the market is a casino and that usually involves betting against the gamblers. One thing you can absolutely guarantee is that they will be buying at the top.

And the whole point is this, to the extent you believe a lot of your arguments imply you think the market is rigged, there are loads of people on this thread who will simply tell you that you are not thinking straight from an investment perspective.

I read very many sources other than this thread and I can tell you there is an overwhelming belief the stock market is rigged because they dont trust it anymore. Abrak what many of the people who earlier were evidently very active investors, is not so much whether “economy is doing badly so the market should go down “ BUT on bad economic news the market goes up. I mean even if it went sideways a bit and below the 10,000 for while as the bad economic news keeps coming out ( particularly the housing market news ), i think it would have been just a little bit more credible than this farce. It didnt even have to fall but these moves are laughable even to me.

If you say that the economy is doing badly so the market should go down that is totally irrational. If you believe that retail selling must result in the market going down, it implies you have the same mentality as them. If you say everyone is bearish so the market will go down again it is totally irrational. When things arent as you think they should be, the first thing you should question is your thinking. The market is often wrong but conspiracy theories require a degree of competency that there is very little evidence that it actually exists. The best opportunities exist when you think straight and the market doesnt. And just think about it, if you think that everything should go down, then you are really simply stating the value of cash should go up which considering its fundamentals is quite optimistic. And if your thinking is that absolutely everything should go down except for gold, then you might understand why I am not particularly optimistic on gold. And if you wish to say that simply proves my point because gold has been going up for the last 8 years then people will simply conclude that you are stupid.

Edited July 25, 2010 by midas

[Abrak]

Yeah but Midas what you really dont get is investment logic.

By definition 'economic news' is 50% better and 50% worse than 'expected'. So there really is no such thing as bad economic news by definition. To the extent that economic news consistently comes in worse than expected a rational investor would buy the market on the basis that economic news consistently coming in worse than expected is an aberration that tends to lead investors to think that future economic news will come in worse than expected while by definition rationally bad economic news is discounted by a market. Rather like the idea that everyone being bearish will result in the market going up, everyone believing that economic news will be worse than expected will result in a rise in the market because it 'implicitly' suggests that expectations are too bearish. To the extent that people 'expect' 'expectations' to come in worse than expected it is simply nonsense.

The concept that you know about some conspiracy because you read a lot of other internet threads is too pathetic an argument to take seriously. Achieving a conspiracy is a lot, lot harder than trying one. Look Midas you dont even invest in the market, so if there was a conspiracy how would you possibly know or understand about it. And please dont base your argument on I have read more internet threads than you. Because now having said you are not an idiot, I am beginning to think you are. Honestly Midas, you cannot claim superior knowledge of the stockmarket when you dont even invest in it or understand basic investment philosophy. I promise you that a lot of people here would like to see the US Government try and rig the market. Attempts at manipulation are often crucified, I certainly shorted the dollar against baht and I even explained it to you all last year. So at least come up with a credible conspiracy rather than showing your fundamental misunderstandings of how investment theory works as a conspiracy against you.

And honestly Midas your arguments are so illogical that anyone here will tell you, you simply dont understand rational investment thought rather than you understand the stockmarket but there is some mega conspiracy against you. Midas my view is that you dont understand things and do not get involved in things you do not understand. Zorro's view is more in line with you are a bit dumb. I would agree with him if you actually invested. But I can promise you, your lines of reasoning are so illogical that it is far more likely that someone will say why are you try to discuss something with an idiot, than your conspiracy theories are true. When your investment theories basically imply the opposite of what you state, you should realize that the chances are you dont understand rather than it is all a conspiracy.

And if you are simply going to justify prejudices as an excuse for not thinking. I hope you realize that 'I know there is a conspiracy because I have read more internet threads than you, implies I am inherently stupid even discussing this subject with you.

And I am not being deliberately critical. I merely wish to express a view that you have shown through out this thread that you have the mentality of a retail investor and the investment logic of a retail investor. Luckily you are smart enough not to invest. And really it is a bit much to claim superior knowledge when you have consistently shown fundamental misunderstandings about how markets work.

Edited July 25, 2010 by Abrak

[BlackJack]

reading this reminds me of my first confession

come on guys move on

its human nature to cheat steal lie deceive

but my favorite all time sin is vanity

Yes BlackJack....talking about “its human nature to cheat steal lie deceive”

I remember your post number 3109 in the Financial Crisis Thread almost one year ago on 19th July 2009 :-

BlackJack said

“ The internet is a powerful tool for sharing information

the wrongs in the USA financial system need righting and theres no denying this.

So i suggest you all sign up at the World wide pledge to end financial fraud

http://www.endfinancialfraud.org/index.php

Its a start and with enough people pledging and making others aware it may take some shape.

Remember the Wall Street Banks have bankrupted the future and your family and your kids will be paying off these massive debts in taxes for many many years. ” :clap2:

Well BlackJack i certainly signed up at that time

So do you still hold the same views today as you seemed to hold then ?

Because I notice one of their “ themes “ is :-

“ Today All Markets Are Legalized Casinos Open Only to Elite Banks & Investment Firms “

NO

now its every man woman child and dog for themselves

[zorro1]

Yeah but Midas what you really dont get is investment logic.

The concept that you know about some conspiracy because you read a lot of other internet threads is too pathetic an argument to take seriously. Achieving a conspiracy is a lot, lot harder than trying one. Look Midas you dont even invest in the market, so if there was a conspiracy how would you possibly know or understand about it. And please dont base your argument on I have read more internet threads than you. Because now having said you are not an idiot, I am beginning to think you are.

52 pages I was saying That.

[midas]

Yeah but Midas what you really dont get is investment logic.

By definition 'economic news' is 50% better and 50% worse than 'expected'. So there really is no such thing as bad economic news by definition. To the extent that economic news consistently comes in worse than expected a rational investor would buy the market on the basis that economic news consistently coming in worse than expected is an aberration that tends to lead investors to think that future economic news will come in worse than expected while by definition rationally bad economic news is discounted by a market. Rather like the idea that everyone being bearish will result in the market going up, everyone believing that economic news will be worse than expected will result in a rise in the market because it 'implicitly' suggests that expectations are too bearish. To the extent that people 'expect' 'expectations' to come in worse than expected it is simply nonsense.

The concept that you know about some conspiracy because you read a lot of other internet threads is too pathetic an argument to take seriously. Achieving a conspiracy is a lot, lot harder than trying one. Look Midas you dont even invest in the market, so if there was a conspiracy how would you possibly know or understand about it. And please dont base your argument on I have read more internet threads than you. Because now having said you are not an idiot, I am beginning to think you are. Honestly Midas, you cannot claim superior knowledge of the stockmarket when you dont even invest in it or understand basic investment philosophy. I promise you that a lot of people here would like to see the US Government try and rig the market. Attempts at manipulation are often crucified, I certainly shorted the dollar against baht and I even explained it to you all last year. So at least come up with a credible conspiracy rather than showing your fundamental misunderstandings of how investment theory works as a conspiracy against you.

And honestly Midas your arguments are so illogical that anyone here will tell you, you simply dont understand rational investment thought rather than you understand the stockmarket but there is some mega conspiracy against you. Midas my view is that you dont understand things and do not get involved in things you do not understand. Zorro's view is more in line with you are a bit dumb. I would agree with him if you actually invested. But I can promise you, your lines of reasoning are so illogical that it is far more likely that someone will say why are you try to discuss something with an idiot, than your conspiracy theories are true. When your investment theories basically imply the opposite of what you state, you should realize that the chances are you dont understand rather than it is all a conspiracy.

And if you are simply going to justify prejudices as an excuse for not thinking. I hope you realize that 'I know there is a conspiracy because I have read more internet threads than you, implies I am inherently stupid even discussing this subject with you.

And I am not being deliberately critical. I merely wish to express a view that you have shown through out this thread that you have the mentality of a retail investor and the investment logic of a retail investor. Luckily you are smart enough not to invest. And really it is a bit much to claim superior knowledge when you have consistently shown fundamental misunderstandings about how markets work.

I could not care one hoot if you you think I am an idiot Abrak and even if I am an idiot so be it…..because at least I am in good company

Nouriel Roubini wrote the government might buy U.S. stocks:

“ The Fed (or Treasury) could even go as far as directly intervening in the stock market via direct purchases of equities as a way to boost falling equity prices. Some of such policy actions seem extreme but they were in the playbook that Governor Bernanke described in his 2002 speech on how to avoid deflation.”

Charles Biderman, CEO of TrimTabs, argues that the government may, in fact, have been buying stocks to prop up the stock market. Given that 25% of the top 50 hedge funds in the world use TrimTabs' research for market timing, it is a credible source.

Mike Whitney :

"What I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . .the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don't know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall."

[midas]

One other thing Abrak............

Apart from you going on line after line saying I am an idiot and that I should not be involved

in the stock market, you still didn’t address how if so much retail money is being withdrawn from

equity markets week after week, who exactly is propping them up ?

And my favourite quote from this week is from that gutsy lady Janet Tavakoli who I

assume you would think is not an idiot and is adequately “ qualified “ to your

standards to participate in the “ market “ ?

“ It makes no difference whether human beings or computers are front

running and manipulating trades. The gyrations in the market last week

have the look and feel of classic market manipulation.” Janet Tavakoli

[zorro1]

One other thing Abrak............

Apart from you going on line after line saying I am an idiot and that I should not be involved

in the stock market, you still didn’t address how if so much retail money is being withdrawn from

equity markets week after week, who exactly is propping them up ?

And my favourite quote from this week is from that gutsy lady Janet Tavakoli who I

assume you would think is not an idiot and is adequately “ qualified “ to your

standards to participate in the “ market “ ?

“ It makes no difference whether human beings or computers are front

running and manipulating trades. The gyrations in the market last week

have the look and feel of classic market manipulation.” Janet Tavakoli

Midas midas midas...

The words "Look" and "feel" are hardly compelling evidence of manipulation.

perhaps a short course in neuro linguistics may help you to break down reality from fiction. Janet Tavakoli appeals to the non thinkers (sheep) since sheep can not distinguish between perception and reality.

Try reading her message again slowly, what does it say that makes you believe it to be true?

[Parvis]

Midas midas midas...

The words "Look" and "feel" are hardly compelling evidence of manipulation.

perhaps a short course in neuro linguistics may help you to break down reality from fiction. Janet Tavakoli appeals to the non thinkers (sheep) since sheep can not distinguish between perception and reality.

Try reading her message again slowly, what does it say that makes you believe it to be true?

In defense of Midas - you might say - although I strongly disagree with his contention of "Manipulation, PPT, Casino etc. etc. etc."

As some of you may know I have always insisted that Market Indices "oscillate" along a "trendline" to create an "orderly Market". See attached - a chart of SPX with blue as the "unspecified trendline" for the last 7 days. There was the day when put/call ratio was very "bearish" at .6 and the next day the Market tanked - as expected - and rebounced - as expected.

The interesting part is going to be what will follow next.

7-23-2010.TIF

Edited July 26, 2010 by Parvis

[zorro1]

10800 target?

"The Dow recovered from last week's scare and is advancing towards the upper border of the broadening wedge formation. Breakout would indicate reversal of the primary down-trend, before it really began. Rising Twiggs Money Flow (21-day) indicates short-term buying pressure."

[Abrak]

One other thing Abrak............

Apart from you going on line after line saying I am an idiot and that I should not be involved

in the stock market, you still didn’t address how if so much retail money is being withdrawn from

equity markets week after week, who exactly is propping them up ?

And my favourite quote from this week is from that gutsy lady Janet Tavakoli who I

assume you would think is not an idiot and is adequately “ qualified “ to your

standards to participate in the “ market “ ?

“ It makes no difference whether human beings or computers are front

running and manipulating trades. The gyrations in the market last week

have the look and feel of classic market manipulation.” Janet Tavakoli

Actually Midas I said you dont understand some basic investment theory and therefore you were smart not to get involved in the market. The simple fact that you assume that the market will go down based on retail selling indicates that. If you ask the question twice then you clearly dont understand. If you claim the market is a gamble and you kinow that most gamblers lose why do you think it would go down?

Thinking about it Midas the amount of money doesnt change so the money doesnt essentially come from anywhere. I would argue that the fact that professional investors were net buyers and the market didnt go up was more likely to be a conspiracy.

Edited July 27, 2010 by Abrak

[lannarebirth]

10800 target?

"The Dow recovered from last week's scare and is advancing towards the upper border of the broadening wedge formation. Breakout would indicate reversal of the primary down-trend, before it really began. Rising Twiggs Money Flow (21-day) indicates short-term buying pressure."

What does a broadening/expanding wedge typically signify zorro?

[zorro1]

Lanna i thought you would never ask ! shhh... its a bit like Abraks love life. Swings wildly both ways

[zorro1]

Danger..warning...warning...

Am back to cash except except 1 stock SVL

Will wait to see which way the CROSS pans out before swing trading again

[PCA]

I think it's time for some conspiracy again as the thread is getting so lame ...

Devoted to hobbyist Parvis in the first place

Only have a minute, but will write more later but...The entire S&P price action in the Futures is being controlled by one counter party. All the guys strongly hate them: their CME clearing number is 990N and they clear through Gelber trading. That one account is solely responsible for the current level of the S&P. They are the ones that are throwing the S&P up overnight. Then they are the ones that are sitting on the bid all day long, supporting the market action. The S&P pits have been decimated, absolutely ruined. There is no volatility, so all the traders have gone.

Now the hot pit is the Eurodollar pit. Go figure, that used to be like watching paint dry.

All the traders I have talked to view the market as being rigged. They keep waiting for the price action to break loose, but it never does. They are stunned by the lack of volatility. And furious. Time after time after time 990 just sits there on the bid. Don't they ever go away? They just absorb the entire market and then push the price wherever they want it to go. "Gee, I wonder who that counter party is." They are all terrified of shorting, because every time they do, they get drilled. I thought it was just my systems that weren't working that well, but they are far more dispirited than I. Intervention at its finest, your tax dollars at work, providing the ultimate tax to us all.

We have watched 2000 contract market orders on the Bid at key down levels of -50 and -100 on those rare days when 990N decides the program trading will revert to a well-defined pattern of "allowable" retracements. The Mini's are being rigged in order to provide "support" for swollen price levels. They have to be for now, as without the daily rigging, "Price" would revert to its inherent "Value", a disturbing proposition to those benefiting from the financial economy's adolescent denials.

Counter parties provide an important function in any exchange -- liquidity. Given the incessant "intervention" by 990N, there is very little liquidity beneath these markets to provide real support.

I am actually writing you to alert you to this complete market manipulation and to see if you had any pull to get the word out to different traders and the media. I am one of the biggest S&P traders in the world as far as volume per day, in that I average over 40,000 round turns per day on the screen in the e-mini. I tell you this because that is how I know one house is completely manipulating the market every day because of all the trades I do with this guy. I know it sounds hard to believe that one person can control a world market, but trust me: this is occurring. He works for the firm Gelber, which is house 990.

This is the basic premise for his game. He waits until the market is relatively slow, around 9:30 to 10:00 every day, usually when the "paper trade" starts to subside, then he begins a theme, mostly always long, and he begins to buy. He is always looking for confirmation of his theme with what other people are doing.

When the market stops trading in his direction he then drops in an offer of 300 to 700 which he sees if anyone is interested in buying it. If there is no interest he then buys the order from himself, with the order actually trading. He does this enough times until he attracts other buyers which then hits price points and the market runs violently in his direction.

I am sure I do not have to tell you that this is completely illegal to do. He started doing this with 300 lots back in November, now he has made so much money doing it that he is up to 2000 lots. He is completely in control of the market (illegally) the majority of the time.

My firm and I have contacted the Merc on three different occasions with video proof that I recorded of my trading. It shows blatantly this guy crossing his orders thousands of times a day. The first person we talked to in compliance admitted that he saw something there when they reviewed the video of the trades I taped of him. The gentleman from compliance was mysteriously fired the next day.

We then came up with more examples for them to review, and in the beginning they claimed he wasn't doing it. We called them a third time, this time talking to the head of compliance, and he finally admitted that they had the guy under investigation because they saw something, but in the meantime he is still allowed to trade and make millions until their "investigation" is concluded.

They obviously love the volume the guy is putting up, and how it makes the emini S&P look from a standpoint of a liquid market. But if the public had knowledge of what this guy was doing I don't think they would be too impressed with the liquidity.

There is obviously some kind of cover-up. Do any of the pit traders you know have knowledge this is happening? And do you have any advice on how I can anonymously get the word out with what this guy is doing? I know you are not a true tick by tick "scalper," but this is getting to the point where it is starting to affect everyone in the marketplace.

Please let me know what you think.

*********************************

The story above is excerpted from a letter I received in 2001, from one of the best traders I know. The answer I gave him is that the action he was seeing is from the Plunge Protection Team, otherwise known as the President's Working Group on Financial Markets in the U.S. It includes the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity Futures Trading Commission. You can find many stories on the Internet supporting the truth of this action and the existence of the Plunge Protection Team. You can also find stories denying it. However, it has been confirmed to me by floor traders as well as the detail from the personal letter above.

I've been telling people about this since 1989. This is nothing new. My friend detected one or more of the members of the Plunge Protection Team (PPT), which has now gone offshore in order to not be discovered. PPT is made up of the largest brokerage firms, who prop up the market whenever the Fed tells the Treasury Department to do so.

Nothing new here. First time it ever happened was 1987. Then again in 1989. I noticed it in 1989 and again in 1997, at a time when it became very consistent for a period of about 9 months leading up to the splitting in half of the S&P 500 contract so that the value of the S&P futures went from 500 times the index to 250 times the index, while at the same time the e-mini S&P was born. Dear friends, it happened again this past week.

[jcon]

I think it's time for some conspiracy again as the thread is getting so lame ...

Devoted to hobbyist Parvis in the first place

Only have a minute, but will write more later but...The entire S&P price action in the Futures is being controlled by one counter party. All the guys strongly hate them: their CME clearing number is 990N and they clear through Gelber trading. That one account is solely responsible for the current level of the S&P. They are the ones that are throwing the S&P up overnight. Then they are the ones that are sitting on the bid all day long, supporting the market action. The S&P pits have been decimated, absolutely ruined. There is no volatility, so all the traders have gone.

Now the hot pit is the Eurodollar pit. Go figure, that used to be like watching paint dry.

All the traders I have talked to view the market as being rigged. They keep waiting for the price action to break loose, but it never does. They are stunned by the lack of volatility. And furious. Time after time after time 990 just sits there on the bid. Don't they ever go away? They just absorb the entire market and then push the price wherever they want it to go. "Gee, I wonder who that counter party is." They are all terrified of shorting, because every time they do, they get drilled. I thought it was just my systems that weren't working that well, but they are far more dispirited than I. Intervention at its finest, your tax dollars at work, providing the ultimate tax to us all.

We have watched 2000 contract market orders on the Bid at key down levels of -50 and -100 on those rare days when 990N decides the program trading will revert to a well-defined pattern of "allowable" retracements. The Mini's are being rigged in order to provide "support" for swollen price levels. They have to be for now, as without the daily rigging, "Price" would revert to its inherent "Value", a disturbing proposition to those benefiting from the financial economy's adolescent denials.

Counter parties provide an important function in any exchange -- liquidity. Given the incessant "intervention" by 990N, there is very little liquidity beneath these markets to provide real support.

I am actually writing you to alert you to this complete market manipulation and to see if you had any pull to get the word out to different traders and the media. I am one of the biggest S&P traders in the world as far as volume per day, in that I average over 40,000 round turns per day on the screen in the e-mini. I tell you this because that is how I know one house is completely manipulating the market every day because of all the trades I do with this guy. I know it sounds hard to believe that one person can control a world market, but trust me: this is occurring. He works for the firm Gelber, which is house 990.

This is the basic premise for his game. He waits until the market is relatively slow, around 9:30 to 10:00 every day, usually when the "paper trade" starts to subside, then he begins a theme, mostly always long, and he begins to buy. He is always looking for confirmation of his theme with what other people are doing.

When the market stops trading in his direction he then drops in an offer of 300 to 700 which he sees if anyone is interested in buying it. If there is no interest he then buys the order from himself, with the order actually trading. He does this enough times until he attracts other buyers which then hits price points and the market runs violently in his direction.

I am sure I do not have to tell you that this is completely illegal to do. He started doing this with 300 lots back in November, now he has made so much money doing it that he is up to 2000 lots. He is completely in control of the market (illegally) the majority of the time.

My firm and I have contacted the Merc on three different occasions with video proof that I recorded of my trading. It shows blatantly this guy crossing his orders thousands of times a day. The first person we talked to in compliance admitted that he saw something there when they reviewed the video of the trades I taped of him. The gentleman from compliance was mysteriously fired the next day.

We then came up with more examples for them to review, and in the beginning they claimed he wasn't doing it. We called them a third time, this time talking to the head of compliance, and he finally admitted that they had the guy under investigation because they saw something, but in the meantime he is still allowed to trade and make millions until their "investigation" is concluded.

They obviously love the volume the guy is putting up, and how it makes the emini S&P look from a standpoint of a liquid market. But if the public had knowledge of what this guy was doing I don't think they would be too impressed with the liquidity.

There is obviously some kind of cover-up. Do any of the pit traders you know have knowledge this is happening? And do you have any advice on how I can anonymously get the word out with what this guy is doing? I know you are not a true tick by tick "scalper," but this is getting to the point where it is starting to affect everyone in the marketplace.

Please let me know what you think.

*********************************

The story above is excerpted from a letter I received in 2001, from one of the best traders I know. The answer I gave him is that the action he was seeing is from the Plunge Protection Team, otherwise known as the President's Working Group on Financial Markets in the U.S. It includes the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity Futures Trading Commission. You can find many stories on the Internet supporting the truth of this action and the existence of the Plunge Protection Team. You can also find stories denying it. However, it has been confirmed to me by floor traders as well as the detail from the personal letter above.

I've been telling people about this since 1989. This is nothing new. My friend detected one or more of the members of the Plunge Protection Team (PPT), which has now gone offshore in order to not be discovered. PPT is made up of the largest brokerage firms, who prop up the market whenever the Fed tells the Treasury Department to do so.

Nothing new here. First time it ever happened was 1987. Then again in 1989. I noticed it in 1989 and again in 1997, at a time when it became very consistent for a period of about 9 months leading up to the splitting in half of the S&P 500 contract so that the value of the S&P futures went from 500 times the index to 250 times the index, while at the same time the e-mini S&P was born. Dear friends, it happened again this past week.

This is a bullshit rumour IMO - that's an arbitrage trade pure and simple. One guy on the floor and another guy trading the minis. C'mon my own boss was 200up on the big contracts in 2000, so it's not like 2000up on the minis is big size IMO. Now I don't know 990 but that's easy to find out who is doing the trades and even somebody like Wolverine Trading would just wreck that guy if he was trying to do that trade over and over for what, since 1987????? No way. Who the eff has been in the S&P pit since 1987? NOBODY. Ok fine, maybe some old douche who never made it but for sure he isn't pushing markets NOW, he'd be dead in the S&P pit by now.

The only thing that ''article/rumour'' got right was that the most badass traders come from the Eurodollar pit (Eurodollar options to be specific). Guys from CooperNeff came in in the mid 90s (from UPenn) and absolutely ruled the SPX after cutting their teeth in Eurodollar options. Best traders I've ever seen.

I call b.s. on that rumour above. There is an active S&P pit trader who has been on this forum (who was around a long time ago, just spoke only through PM) but if there is any truth to that crap he would know (we knew the same size traders, and they are still the same). I dunno if that guy is still around but if he is, I hope he chimes in.

[Parvis]

PCA - slight correction on your statement that I am a "Hobbyist" - my interests are more that of a "Scientist". As a scientist - I agree with you in some respect - namely that Markets are controlled. It is just when you use terms such as "PPT" and action such as "Market propped up" - when I totally disagree. This is just too primitive - too unimaginative - too ignorant of todays technology. I certainly hope my Government would be more sophisticated. It also requires an Act of Congress to "interact with Markets directly". If at all - it needs to be a very systematic "Day in - Day out" approach - not an occasional "propping up".

From the standpoint of a scientist - I most certainly can come up with a computer program that regulates the Market with derivatives - as long as derivatives are largely going through the same "Source and Clearing house". Surprise - surprise - - they do. AHH - but now the most profitable US brokerage house want to have their own Option Clearing House.

In a recent posting by jcon - refuting my comment that Index options (and futures) are used to "keep Markets orderly" - he actually also confirmed my statement - namely that Floor Traders know zilch what is going on "in the back rooms (ie Computers)". They just "buy beta and sell delta" - all day long according to his/her instructions.

Markets are "kept orderly - systematically".

Edited August 1, 2010 by Parvis