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In the news, the stock market is falling for reasons no one knows.

I wonder if the market will fall more than 10% for no reason before it mysteriously climbs back to where it was for no reason.

We might be seeing the usual summer sell-off happening early because people are trying to get ahead of it. Or the pullback might have something to do with the Fed, or Ukraine, or a sudden shared realization that stocks are overvalued. Or it could be random, as in lots of people deciding to sell at around the same time for no special reasons.

Or it could be that the stock market is fixed and the fixers are shaking the loose change out of grandpa's trousers before they goose the markets back to its prior highs in September and enjoy the gains.

I have no evidence that the market is fixed. But it's hard to argue with the idea that whenever humans have a lot to gain from doing evil, and a small chance of getting caught, evil happens. 

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Scott Adams

CalendarTree.com start-up Co-founder

 Author of the most important book most of you haven't yet read.

 

 


 
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+2 Rank Up Rank Down
Apr 14, 2014
Never attribute to malice that which can be explained by stupidity (or in this case irrationality). Or perhaps it's completely rational, but we just don't see it yet.

Just because it's frustrating doesn't mean you have to blame someone. Why not blame the gods?
 
 
-1 Rank Up Rank Down
Apr 14, 2014
@MTBob:
That's not how mutual buying works. Regular, open-end mutual funds are priced every day at the Net Asset Value (NAV) - closing price of the stocks (or other securities) in them. There is no timing or discretion. Every trade placed today before 4pm EDT gets the exact same price of today's NAV. Every trade placed after 4pm today and before 4pm tomorrow gets tomorrow's closing NAV price.

Exchange Traded Funds (ETFs) trade exactly like stocks - when you place the trade.
 
 
Apr 14, 2014
I assume that the Wall Street crowd aren't all in cahoots -- They're trying to beat each other in high-risk poker. The winner rakes in his chips and pays ordinary investors their promised 1%; the loser finds a way to pass on all his losses. So Grandpa either gets his paltry interest or loses his capital.
 
 
0 Rank Up Rank Down
Apr 13, 2014
Good call Scott: Tech insiders dumped shares ahead of slide....
http://www.ft.com/cms/s/0/185b0220-c321-11e3-94e0-00144feabdc0.html#axzz2yoXzWkt2
 
 
Apr 13, 2014
Hey, Scott, completely off topic, but I saw something that might interest you. Being a techno-guru, you probably already know about this, but just in case, here's something you might want to know about. It's called the "Watson Mobile Developer Challenge."

In brief, it's an invitation to submit a proposal to make a mobile app using the IBM Watson capabilities. Watson is a cognitive-based computer system that is a first step toward building your 'sentient computer' idea. Proposals that are deemed most worthy will get access to Watson technology and support from the IBM Watson team.

Even if you don't submit a proposal, it might be interesting to review the site and see what's going on there. The URL is http://www.ibm.com/smarterplanet/us/en/ibmwatson/challenge.html?cmp=usbrb&cm=s&csr=watson.site_20140319&cr=index&ct=usbrb301&cn=sec1news

 
 
0 Rank Up Rank Down
Apr 13, 2014
MTBob: "If I submit an order to buy into a mutual fund on Monday morning..."
You still buy mutual funds? Well, there's your problem.

Have a look at http://www.amazon.com/dp/B000FCKBT8 and then go for ETFs with broad, regional indexes. Choose an exchange and buy there. The exchange should also have a way of seeing the real time ticker data for a few dollars per year. Check the price, and, if you like it, submit a limit order.

Yes, it's about 10 to 20 US$ per order but that's the price you pay for fairness.
 
 
+13 Rank Up Rank Down
Apr 13, 2014
As long as loose change is all they're shaking out of grandpa's trousers, I'm ok.
 
 
+5 Rank Up Rank Down
Apr 13, 2014
Straight up shenanigans.

Just shaking down 100 million people for a dollar once and awhile is good capitalism.
 
 
0 Rank Up Rank Down
Apr 12, 2014
Personally, I can't help but notice that it was coincident with Michael Lewis' book tour. This has happened before, when HFT hit the news: my hunch is that some traders decided to turn off their strategies (at least temporarily). These strategies were artificially inflating certain stocks, causing a correction, which generally triggers a selloff. Soon we may see the effect of bearish strategies that can take advantage of that vicious cycle and artificially deflate the bottom, but since that would just bring HFT back to the front page of the USA Today again, my personal guess is that it's unlikely there will be "blood in the water." You never know though.
 
 
+1 Rank Up Rank Down
Apr 12, 2014
I'm going to put this here. I don't know if you will take the time to read it, but it's worth considering - http://www.realforecasts.com/whats-next-for-employment-growth/
 
 
0 Rank Up Rank Down
Apr 12, 2014


Savings accounts are safe, but pay nothing. Bonds and bond funds also pay too little. The markets are too volatile and unreliable.
Small businesses are too risky.
Real estate used to be a reasonable bet, though long term. Today people think renting is a better investment?
Commercial real estate? Shopping malls? Condos?

So where do I keep my retirement fund? Certainly not expecting my social security money to come back.

What, I should buy rice, beans and canned goods?


If I submit an order to buy into a mutual fund on Monday morning (because the market is down) they will buy in when it's low, but tell me they bought it at a higher level and pocket the difference. If it drops after they buy, they tell me they bought at the lower level. They have 24 hours to play this game with every purchase and every customer.
Even if the market isn't manipulated, the transactions certainly are.

When a financial adviser and the fund managers make more money from the client's money than the client does, the system is rigged against the consumer.

 
 
Apr 12, 2014
Here's something I had cut and saved from somewhere a long time ago.

"The declines that trouble me are the ones we don't understand; when the rationale for selling is not obvious. When the market drops on some obvious piece of bad news, that's okay. The market will recover when people realise that its not the end of the world. When it dips and there is no obvious reason for it, that's the time to worry."
 
 
+3 Rank Up Rank Down
Apr 12, 2014
For a reason. And a good one. Irrationality.
 
 
0 Rank Up Rank Down
Apr 11, 2014
The answer is robots control the stock market.

All of the subsecond trading with each computer program (i.e., robot) trying to outguess the other computer programs in order to make a gain.

Used to be we read the stock prices once per day in the stock pages of the evening paper and made decisions. Now the robots are doing tons of trades each day. I am sure there are some that have 'faking' in their algorithm to see of the other robots will follow. Easy for a computer to see a few shares of a lot of companies at a real low price to try to get followers so they can buy a lot of shares when others follow it.

I am sure the robots are programmed by psychologists as well as analysts, trying to get the most gain.
 
 
Apr 11, 2014
It does not follow that, if something doesn't make sense, that there must be a hidden force that wants/benefits from the current situation. That's how we have gotten to so many destructive superstitions of every sort throughout time. There is not much difference between blaming god/gods or seeing evil "fixers" behind our predicaments.

It's more logical to surmise that rather than those forces being so omnipotent, omniscient, and manipulative that they are unrealistically controlling things to their benefit, that often s#@*t just goes sideways, despite absolutely everyone's wish that it didn't. And the fear that there are bad forces in control behind the scenes only helps to exacerbate the fear of being caught on the wrong side of those forces' evil intent.
 
 
Apr 11, 2014
"But it's hard to argue with the idea that whenever humans have a lot to gain from doing evil, and a small chance of getting caught, evil happens." Too general a statement. Some people will do evil; others have morals and will not.

"In the news, the stock market is falling for reasons no one knows." Well, that's sort of the point, Scott. If you could come up with a way to know what the stock market was going to do, and determine exactly why it was going to do it, then you could anticipate its moves and day-trade your way to wealth. But as with any large, complex system that responds to many variables, and which rises and falls based on emotional reactions to things, it's difficult to anticipate. Which also makes it hard to rig.

You could more easily manipulate a single stock than you could the entire market, which is made up of (NYSE) around 2,800 companies with a market cap of approximately $16.6 trillion, with an average trading volume per day of around $169 billion, which comes from thousands of trades. Sort of difficult to anticipate what it's going to do.

Sure, there's fraud, and some minor manipulation. But I don't think there's really anywhere near as much as you seem to (often) propose.

 
 
Apr 11, 2014
Torrents of retirement money are spewed at Wall Street, and some stocks benefit unworthily, thus cheapening the whole idea of investing. Investing should be for building toward things and services of value. http://qr.net/stx3
 
 
-1 Rank Up Rank Down
Apr 11, 2014
The worst of statistician gobbledygook and the worst of journalist hyperbole come together in stock market reports through the mass media. Many of those reports are about as useless and non-informative as sports page articles. I think the large day to day fluctuations many times due to mass hysteria encouraged by some economic biggies who not only profit but have a good time at it, too.

It is weird how the The Stock Market is anthropomorphized into a touchy giant crouching in a pit, munching on data from innumerable *Reports.* The rumbles from its stomach spread fear into the economy. Its babble as interpreted by oracular *experts* shapes our lives and ruins many arbitrarily.

Now that banks, with the blessing of the federal government, do not give decent interest on short-term savings, more and more people turn to The Stock Market, andface Volatility and Uncertainty. Torrents of retirement money are spewed at Wall Street, and some stocks benefit unworthily, thus cheapening the whole idea of investing. Investing should be for building toward things and services of value. It might seem that only in the modern world could the Beanie Baby billionaire have come about.

But then, read EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS for past episodes of the human folly that come about through uninformed investing. Tulip Mania, and The South Sea Bubble are explained.

Hell yes, there is manipulation of the stock market, how could any human with the power resist? We are playthings to some insidious group. I remember the situation portrayed in The Twilight Zone episode, *The Monsters are Due on Maple Street,* and think we could just change the name to Wall Street to get the same lesson. Is some Thing crouching toward Wall Street to be born?

Hans Christian Andersen could have made an instructive story about Wall Street and The Stock Market, with demons and trolls in the place of investment counselors and stock market analysts. Or Lord Dunsany could have written it a modern update to *The Fortress Unvanquishable, Save for Sacnoth.* I look forward to that future sacnoth in whatever form it takes.

That was fun.
 
 
Apr 11, 2014
"Grandpa" shouldn't be in the market if he is relying on the money for near-term needs. If he doesn't need the money now and doesn't sell until it adjusts back up, not a penny has been shaken out of his trousers.
 
 
+5 Rank Up Rank Down
Apr 11, 2014
The current turbulence in the stock market follows the publication of 'Flash Boys', Michael Lewis's book about the rigging of trades by high-frequency traders. I'm surprised nobody here has mentioned it yet -- it's attracted a lot of notice all over the media.

Anyway, if you're not familiar with the book or its contents, you can listen to NPR's Terry Gross interviewing its author about it:

http://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference

(37' 25")
 
 
 
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