Manipulating the Market

In the closing days of July, the stock market began to sag. No one seems to know why. We are informed that the American economy is in good shape. We are also advised that the global economy is also in good shape. Some theorize that it has to do with bad loans on housing. But, whatever the explanation, the assumption is that the sag in the market is due to certain economic factors.

What all these explanations have in common is the assumption that “the market” is an independent factor. But the truth may well be that the market can be manipulated in a game played by bulls and bears where bulls become bears and vice versa over night.

Here’s how:

A handful of brokerage houses advise their clients that this is the moment to sell. Guided by their brokers they sell. The market begins to sag. The individual investor is grateful that he has such a wise broker. Meanwhile, the media carry the news that there are forces at work depressing the market. More investors sell.

Meanwhile, individual investors are granted stock options that enable them to buy a stock at a low price at some future time when the prices on the stock rise.

Yesterday’s bears now become bulls advising their clients to “buy now!”

In short, what happens on Wall Street may have nothing at all to do with what is happening in the economy because the “market” can be — and is often — manipulated.

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Manipulating the Market

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