The Deadly Art of Stock Manipulation

In every profession, there are probably a dozen or two major rules. Knowing them is what separates the professional from the amateur. Not knowing them at all? Well, let’s put it this way: How safe would you feel if you suddenly found yourself piloting (solo) a Boeing 747 as it were landing on an airstrip? Unless you are a professional pilot, you would probably be frightened out of your wits and would spoil your underwear. Hold that thought as you read this essay because I will explain to you how market manipulation works. What the professionals and the securities regulators know and understand, which the rest of us do not, is this.

RULE NUMBER ONE:
ALL SHARP PRICE MOVEMENTS -- WHETHER UP OR DOWN --ARE THE RESULT OF ONE OR MORE (USUALLY A GROUP OF) PROFESSIONALS MANIPULATING THE SHARE PRICE.

This should explain why a mining company finds something good and" nothing happens" or the stock goes down. At the same time, for NO apparent reason, a stock suddenly takes off for the sky! On little volume! Someone is manipulating that stock, often with an unfounded rumour. 

In order to make these market manipulations work, the professionals assume: 

(a) The Public is STUPID and (b) The Public will mainly buy at the HIGH and (c) The Public will sell at the LOW. Therefore, as long as the market manipulator can run crowd control, he can be successful. 

Let's face it: The reason you speculate in such markets is that you are greedy AND optimistic. You believe in a better tomorrow and NEED to make money quickly. It is this sentiment which is exploited by the market manipulator. He controls YOUR greed and fear about a particular stock. If he wants you to buy, the company's prospects look like the next Microsoft. If the manipulator wants you to desert the sinking ship, he suddenly becomes very guarded in his remarks about the company, isn't around to glowingly answer questions about the company and/or GETS issued very bad news about the company. Which brings us to the next important rule?

RULE NUMBER TWO:
IF THE MARKET MANIPULATOR WANTS TO DISTRIBUTE (DUMP) HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL CAMPAIGN.

Ever wonder why a particular company is made to look like the greatest thing since sliced bread? That sentiment is manufactured. Newsletter writers are hired -- either secretly or not -- to cheerlead a stock. PR firms are hired and let loose upon an unsuspecting public. Contracts to appear on radio talk shows are signed and implemented. Stockbrokers get "cheap" stock to recommend the company to their "book" (that means YOU, the client in his book). An advertising campaign is rolled out (television ads, newspaper ads, card deck mailings). The company signs up to exhibit at "investment conferences" and "gold shows" (mainly so they can get a little "podium time" to hype you on their stock and tell you how "their company is really different" and" not a stock promotion.") Funny little "hype" messages are posted on Internet newsgroups by the same cast of usual suspects. The more, the merrier. And a little "juice" can go a long way toward running up the stock price. The HYPE is on. The more clever a stock promoter, the better his knowledge of the advertising business. Little gimmicks like "positioning" are used. 

Example: Make a completely unknown company look warm and fuzzy and appealing to you by comparing it to a recent success story. The only reason you have been invited to this seemingly incredible banquet is that YOU are the main course. After the market manipulator has suckered you into "his investment," exchanging HIS paper for YOUR cash, the walls begin to close in on you. Why is that?

RULE NUMBER THREE:
AS SOON AS THE MARKET MANIPULATOR HAS COMPLETED HIS DISTRIBUTION (DUMPING) OF SHARES, HE WILL START A BAD NEWS OR NO NEWS CAMPAIGN.

Your favorite home-run stock has just stalled or retreated a bit formats high. Suddenly, there is a news VACUUM. Either NO news or BAD rumors. I discovered this with quite a few stocks. I would get LOADS of information and "hot tips." All of a sudden, my pipeline was shut-off. Some companies would even issue a news release CONDEMNING me ("We don't need 'that kind of hype’ referring to me!). Cute, huh? When the company wanted fantastic hype circulated hither and yon, there would be someone there to spoon-feed me. The second the distribution phase was DONE.... oops! Sorry, no more news. Or, "I'm sorry. He's not in the office." Or, "He won't be back until Monday." The really slick market manipulators would even seed the Internet newsgroups or other journalists to plant negative stories about that company. Or start a propaganda campaign of negative rumors on all available communication vehicles. Even hiring a "contraire" or" special PR firm" to drive down the price. Even hiring someone to attack the guy who had earlier written low about the company. (This is not a game for the faint-hearted!) You'll also see the stock drifting endlessly. You may even experience a helpless feeling, as if you were floating in outer space without a lifeline. That is exactly HOW the market manipulator wants you to feel. See Rule Number Five below. He may also be doing this to avoid the severe disappointment of a "dry hole" or a "failed deal." You'll hear that oft-cried refrain, "Oh well, that's the junior minerals exploration business... very risky!" Or the oft-quoted statistic, "Nine out of 10 businesses fail each year and this IS a Venture Capital Start-up stock exchange." Don't think it wasn't contrived. If a geologist at a junior mining company wasn't optimistic and rosy in his promise of exploration success, he would be replaced by someone who was! Ditto for the high-tech deal, in a world awash with PhD's. So, how do you know when you are being taken? Look again at Rule #1.Inside that rule, a few other rules unfold which explain how a stock price is manipulated.

RULE NUMBER FOUR:
ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER PRICES SIGNALS THE DISTRIBUTION PHASE.

When there was less volume, the price was lower. Professionals were accumulating. After the price runs, the volume increases. The professionals bought low and sold high. The amateurs bought high (and will soon enough sell low). In older books about market manipulation and stock promotion, which I've recently studied, the mark-up price referred to THREE times higher than the floor. The floor is the launch pad for the stock. For example, if one looks at the stock price and finds a steady flat line on the stock's chart of around 10p , then that range is the FLOOR. Basically, the mark-up phase can go as high as the market manipulator is capable of taking it. From my observations, a good mark-up should be able to run about five to ten times higher than the floor, with six to seven being common. The market manipulator will do everything in his power to keep you OUT OF THE STOCK until the share price has been marked up by at least two-three times, sometimes resorting to "shaking you out" until after he has accumulated enough shares. Once the mark-up has begun, the stock chart will show you one or more spikes in the volume -- all at much higher prices (marked up by the manipulator, of course).

RULE NUMBER FIVE:
THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE.

Just as the manipulator will use every available means to invite you to "the party," he will savagely and brutally drive you away from "his stock" when he has fleeced you. The first falsehood you assume is that the stock promoter WANTS you to make a bundle by investing in his company. So begins a string of lies that run for as long as your stomach can take it. You will get the first clue that "you have been had" when the stock stalls at the higher level. Somehow, it ran out of steam and you are not sure why. Well, it ran out of steam because the market manipulator stopped running it up. It's over inflated and he can't convince more people to buy. The volume dries up while the share price seems to stall. LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE! When earlier, there may have been X amounts of shares trading each day for eight out of 12 trading days (as in the case of CONROY), now the volume has slipped to X amount shares (or so) daily. There are some buyers there, enough for the manipulator to continue dumping his paper, but only so long as he can enlist one or more individuals/services to bang his drum. He may continue feeding the promo guys a string of "promises" and" good news down the road." (Believe me, this HAS happened to me!) But, when the news finally arrives, the stock price goes THUD! This is entirely orchestrated.

RULE NUMBER SIX:
IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER PRICES.

Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going to force it into your pocket." The same concept can be more clearly understood by watching the trades. When a market manipulator wants you into his stock, you will hear LOUD noises of stock promotion and hype. If you are "in the loop," you will be bombarded from many directions. Similarly, if he wants you out of the stock, then there will be orchestrated rumours being circulated, rapid-fired at you again from many directions. Just as good news may come to you in waves, so will bad news. You will see evidence of a VERY sharp drop in the share price with HUGE volume. That is you and your buddies running for the exits. If the deal is really for real, the market manipulator wants to get ALL OF YOUR SHARES or as many as he can... and at the lowest price he can. Where as before, he wanted you IN his market, so he could dump his shares to you at a higher price, NOW when he sees that this deal IS for real, he wants to pay as little as possible for those same shares... YOUR shares which he wants you to part with, as quickly as possible. The market manipulator will shake you out by DRIVING the price as lows he can. Just as in the "accumulation" stage, he wants to keep everything as quiet as possible so he can snap up as many of the shares for himself, he will NOW turn down, or even turn off, the volume so he can repeat the accumulation phase. The accumulation phase was TOP SECRET. The noise level was deafeningly silent. As soon as the insiders accumulated all their shares, they let YOU in on the secret.

RULE NUMBER SEVEN:
CONVERSELY, YOU WILL OFTEN BE THE LAST TO KNOW WHEN THIS DEAL SHOWS SIGNS OF FAILURE.

Twenty-twenty hindsight will often show you that there was a "little stumble" in the share price, just as the "assays were delayed" or the" deal didn't go through." Manipulators were peeling off their paper to START the downslide. And ACCELERATE it. The quick slide down makes it improbable for your getting out at more than what you originally paid for the stock... and gives you a better reason for holding onto it "a little longer" in case the price rebounds. Then, the drifting stage begins and fear takes over. And unless you have nerves of steel and can afford to wait out the manipulator, you will more than likely end up selling out at a cheap price. For the insider, market maker or underwriter is obliged to buy back all of your paper in order to keep his company alive and maintain control of it. The less he has to pay for your paper, the lower his cost will be to commence his stock promotion again... at some future date. Even if his company has no prospects AT ALL, his "shell" of a company has some value (only in that others might want to use that structure so they can run their own stock promotion). So, the manipulator WILL buy back his paper. He just wants to make sure that he pays as little for those shares as possible.

RULE NUMBER EIGHT:
THE MARKET MANIPULATOR WILL COMPEL YOU INTO THE STOCK SO THAT YOU DRIVE UP ITS PRICE SHARES.

Placing a Market Order or Pre-Market Order is an amateur's mistake, A market manipulator (traders included here) can jack up the share price during your market order and bring you back a confirmation at some preposterous level. The Market Manipulator will use the "tape" against you. He will keep buying up his own paper to keep you reaching for a higher price. He will get in line ahead of you to buy all the shares at the current price and force you to pay MORE for those shares. He will tease you and MAKE you reach for the higher price so you "won't miss out." Miss out on what? Getting your head chopped off, that's what! One can avoid market manipulation by not buying during the huge price spikes and abnormal trading volumes, also known as chasing the stock to a higher price.

RULE NUMBER NINE:
THE MARKET MANIPULATOR IS WELL AWARE OF THE MOTIONS YOU ARE EXPERIENCING DURING A RUN UP AND A COLLAPSE AND WILL PLAY YOUR EMOTIONS LIKE A PIANO.

During the run up, you WILL have a rush of greed which compels you to run into the stock. During the collapse, you WILL have a fear that you will lose everything... so you will rush to exit. See how simple it is and how clear a bell it strikes? Don't think this formula isn’t tattooed inside the mind of every manipulator. The market manipulator will play you on the way up and play you on the way down. If he does it very well, he will make it look like someone else's fault that you lost money! Promise to fill up your wallet? You'll rush into the stock. Scare you into losing every penny you have in that stock? You'll run away screaming with horror! And vow to NEVER, ever speculate in such stocks again. But many of you still do.... The manipulator even knows how to bring you back for yet another play. What actors! No wonder Vancouver is sometimes called "Hollywood North."

FINAL RULE:
A NEW BATCH OF SUCKERS ARE BORN WITH EVERY NEW PLAY.

The Financial Markets are a Cruel, Unkind and Dangerous Playing Field, one place where the newest amateurs are generally fleeced the most brutally.... usually by those who KNOW the above rules. Just as I have a duty to ensure that each of you understand how this game is played, YOU now have that same duty to guarantee that your fellow speculator understands these rules. Just as I would be a criminal for not making this data known to you, YOU would be just as criminal to keep it a secret. There will always be an unsuspecting, trusting fool whom the rabid dogs will tear to shreds, but it does NOT have to be this way. IF every subscriber made this essay broadly known to his friends, acquaintances and family, and they passed it on to their friends, word of mouth could cause many of these market manipulators to pause. IF this effort were done strenuously by many, then perhaps the financial markets could weed out the crooked manipulators and the promoters could bring us more legitimate plays. The stock markets are a financing tool. The companies BORROW money from you, when you invest or speculate in their companies. They want their share price going higher so they can finance their deal with less dilution of their shares... if they are good guys. But, how would you feel about a friend or family member who kept borrowing money from you and never repaid it? That would be theft, plain and simple. So, a market manipulator is STEALING your money.

Source: http://timelesswealth.net/articles/deadly_art_of_stock_manipulation.html

Quote for the day

"A good trader loves an active market, you don't make money when the market is static." - Kevin Kinsella

7 Reasons Why Those 90% Of New Traders Never Made It

1. They could not handle the losses. Some could not handle losing money at all, others chose to not manage risk and the big losses ruined them financially and they had to stop trading. Or the big losses ruined them mentally or emotionally for trading and they could not get back in the game after the damage was done.

2. They had a overwhelming desire to be right all time and could not handle being wrong. They could never grasp that trading is not about being right personally but instead simply being on the right side of the market price action.

3. They thought they were smarter than the market and all the other traders even though they were just newbies. The market showed them how counter-intuitive and irrational it can be.

4. They did not do their homework before they started trading money. Their education was in the moment and they were doomed from the start. If new traders are too lazy to read numerous trading books, study charts, study legendary traders, understand the risk of ruin, trader psychology, and test systems they will never make it. The hardest part of being a new trader is to even discover what you do not know and find out where to start.

5. If you enjoy the game of trading and the markets you may make it because you may not quit when you understand the work ahead. If you are doing this 100% for the money and think you will go take some quick easy money from all the professional traders with little effort, you are going to have a bad time. Passion for trading is the you must have to take you over the learning curve to profitability.

6. The new trader has to first focus on finding out what the right questions are then they have to go find the right answers from the right places.

7. Many new traders come from other professional fields and just can not get back to the beginners mind required to learn a new field of expertise. They want to be instantly knowledgeable and respected as experts and that is a long process that takes years of study and real time trading success.

Source: newtraderu.com

Quote for the day

"The people when rightly and fully trusted will return the trust." - Abraham Lincoln

The 4 Types of Decisions, and How to Approach Each One

By Doug and Polly White 

Making good decisions is critical to business success. The first step in good decision-making is to understand that not all decisions are created equal.

We like to differentiate decisions along two dimensions: importance and urgency. An important decision is one that has the potential to have a significant impact on your business or on a person’s life. An urgent decision is one that you must make immediately -- there is no time for further consideration.

If you consider these two dimensions together, the results are these four types of decisions, and how to approach them:

1. Neither urgent, nor important

• Consider taking no action. If a decision is neither urgent nor important, you may not need to make it at all.
• Delegate to others. Such decisions provide an opportunity for a manager to coach subordinates on how to think about decision-making.
• Delay to less hectic times. Resist the temptation to focus on items that you can check off your “to-do” list quickly when there are other more important and urgent decisions that need attention.
• Beware of morphing. Don’t delay the decision until it becomes urgent.

2. Urgent, but not important

• Don’t overanalyze. Because these decisions are not important, going through a lengthy process to make the decision simply doesn’t make any sense. In some outrageous cases the cost of the time spent analysing a decision can exceed the cost of making a wrong decision.
• Use principles. Rules of thumb, guidelines and principles can provide a great way to make decisions quickly and efficiently. This will also ensure that decisions align with the values of the organization.
• Listen to your gut. As an experienced businessperson, you have good judgement -- don’t be afraid to use it.

3. Both urgent and important

• Prevent morphing. Left unaddressed, many decisions will morph into this category. Don’t let it happen.
• Beware of false urgency. Many decisions that are portrayed as urgent, aren’t. Don’t be pressed into making an important decision without careful consideration when you don’t have to.
• Reduce urgency. Consider whether you can take steps to buy yourself time to make this important decision.
• Keep options open. Consider options that will allow you the most flexibility later. If you can avoid it, don’t get locked in.
• Consult experts. These are the people that are the most likely to have immediate insight into the right direction to proceed.

4. Important but not urgent

• Identify and address the right problem. Solving complex problems requires asking a series of questions that are relatively easy to answer. The answers to these more straightforward questions then lead you to the solution of the more complicated issue.
• Have the right mindset. When you face a big decision, don’t be overcome by emotions. Ask two questions: What do I want to happen next? What do I have to do to maximize the probability that that occurs?
• Utilize appropriate analytical tools. For decisions that are important but not urgent, it is sometimes helpful to use decision-making tools. There is time to apply the tools and the cost of doing so is justified by the magnitude of the decision.
• Seek the counsel of experts. Any time you face an important decision, seeking help from experts is a good idea.
• Live with your decision before executing. Make a decision and sleep on it before implementing.

Good decision-making is critical. Understanding the type of decision you are facing and responding appropriately will help you to increase your effectiveness.

Source: www.entrepreneur.com

Quote for the day

"Investing is for wealth preservation, not wealth creation, so first you have to make wealth." - James Altucher

44 Wealth Principles

44 Wealth Principles from T. Harv Eker's best-selling book ‘Secrets of the Millionaire Mind; Mastering the Inner Game of Wealth':

WEALTH PRINCIPLE 1:
Your income can grow only to the extent you do!

WEALTH PRINCIPLE 2:
If you want to change the fruits, you will first have to change the roots. If you want to change the visible, you must first change the invisible.

WEALTH PRINCIPLE 3:
Money is a result, wealth is a result, health is a result, illness is a result, your weight is a result. We live in a world of cause and effect.

WEALTH PRINCIPLE 4:
Give me five minutes, and I can predict your financial future for the rest of your life.

WEALTH PRINCIPLE 5:
Thoughts lead to feelings. Feelings lead to actions. Actions lead to results.

WEALTH PRINCIPLE 6:
When the subconscious mind must choose between deeply rooted emotions and logic, emotions will almost always win.

WEALTH PRINCIPLE 7:
If your motivation for acquiring money or success comes from a non supportive root such as fear, anger, or the need to “prove” yourself, your money will never bring you happiness.

WEALTH PRINCIPLE 8:
The only way to permanently change the temperature in the room is to reset the thermostat. In the same way, the only way to change your level of financial success “permanently” is to reset your financial thermostat.

WEALTH PRINCIPLE 9:
Consciousness is observing your thoughts and actions so that you can live from true choice in the present moment rather than being run by programming from the past.

WEALTH PRINCIPLE 10:
You can choose to think in ways that will support you in your happiness and success instead of ways that don’t.

WEALTH PRINCIPLE 11:
Money is extremely important in the areas in which it works, and extremely unimportant in the areas in which it doesn’t.

WEALTH PRINCIPLE 12:
When you are complaining, you become a living, breathing “crap magnet.”

WEALTH PRINCIPLE 13:
There is no such thing as a really rich victim!

WEALTH PRINCIPLE 14:
If your goal is to be comfortable, chances are you’ll never get rich. But if your goal is to be rich, chances are you’ll end up mighty comfortable.

WEALTH PRINCIPLE 15:
The number one reason most people don’t get what they want is that they don’t know what they want.

WEALTH PRINCIPLE 16:
If you are not fully, totally, and truly committed to creating wealth, chances are you won’t.

WEALTH PRINCIPLE 17:
The Law of Income: You will be paid in direct proportion to the value you deliver according to the marketplace.

WEALTH PRINCIPLE 18:
“Bless that which you want.” —Huna philosophy

WEALTH PRINCIPLE 19:
Leaders earn a heck of a lot more money than followers!

WEALTH PRINCIPLE 20:
The secret to success is not to try to avoid or get rid of or shrink from your problems; the secret is to grow yourself so that you are bigger than any problem.

WEALTH PRINCIPLE 21:
If you have a big problem in your life, all that means is that you are being a small person!

WEALTH PRINCIPLE 22:
If you say you’re worthy, you are. If you say you’re not worthy, you’re not. Either way you will live into your story.

WEALTH PRINCIPLE 23:
If a hundred-foot oak tree had the mind of a human, it would only grow to be ten feet tall!

WEALTH PRINCIPLE 24:
For every giver there must be a receiver, and for every receiver there must be a giver.

WEALTH PRINCIPLE 25:
Money will only make you more of what you already are.

WEALTH PRINCIPLE 26:
How you do anything is how you do everything.

WEALTH PRINCIPLE 27:
There’s nothing wrong with getting a steady paycheck, unless it interferes with your ability to earn what you’re worth. There’s the rub. It usually does.

WEALTH PRINCIPLE 28:
Never have a ceiling on your income.

WEALTH PRINCIPLE 29:
Rich people believe “You can have your cake and eat it too.” Middle-class people believe “Cake is too rich, so I’ll only have a little piece.” Poor people don’t believe they deserve cake, so they order a doughnut, focus on the hole, and wonder why they have “nothing.”

WEALTH PRINCIPLE 30:
The true measure of wealth is net worth, not working income.

WEALTH PRINCIPLE 31:
Where attention goes, energy flows and results show.

WEALTH PRINCIPLE 32:
Until you show you can handle what you’ve got, you won’t get any more!

WEALTH PRINCIPLE 33:
The habit of managing your money is more important than the amount.

WEALTH PRINCIPLE 34:
Either you control money, or it will control you.

WEALTH PRINCIPLE 35:
Rich people see every dollar as a “seed” that can be planted to earn a hundred more dollars, which can then be replanted to earn a thousand more dollars.

WEALTH PRINCIPLE 36:
Action is the “bridge” between the inner world and the outer world.

WEALTH PRINCIPLE 37:
A true warrior can “tame the cobra of fear.”

WEALTH PRINCIPLE 38:
It is not necessary to try to get rid of fear in order to succeed.

WEALTH PRINCIPLE 39:
If you are willing to do only what’s easy, life will be hard. But if you are willing to do what’s hard, life will be easy.

WEALTH PRINCIPLE 40:
The only time you are actually growing is when you are uncomfortable.

WEALTH PRINCIPLE 41:
Training and managing your own mind is the most important skill you could ever own, in terms of both happiness and success.

WEALTH PRINCIPLE 42:
You can be right or you can be rich, but you can’t be both.

WEALTH PRINCIPLE 43:
Every master was once a disaster.

WEALTH PRINCIPLE 44:
To get paid the best, you must be the best.

Source: Secrets of the Millionaire Mind, © 2003