Wednesday, August 10, 2011

And For Our Next Trick . . .

Yesterday's market antics were so extreme and so fascinating, I feel forced to drop everything else and make some comments. Here's what the Dow and Nasdaq looked like (click on image to enlarge):

As you can see, the Dow began with a rapid leap upward, by roughly 100 points, only to suddenly dip downward, by roughly 150 points, followed by a rapid surge upward once again, by over 200 points, all in the first half hour of trading (the market opens at 9:30). I've seen volatility like this before, but never by such huge amounts in such a short time. It then remains relatively steady, though still with large surges back and forth, until about 2:20, when there is a sudden, enormous dip of over 200 points, all in one gulp. Then, inexplicably, it surges upward again, just as rapidly, by about 150 points -- and then takes a huge, absolutely breathtaking plunge of almost 300 points, all in about 15 minutes.

This last activity is apparently a reaction to an announcement by the Federal Reserve indicating that no dramatic actions will be taken by them in the near future, coupled with an assurance that interest rates will be kept to a bare minimum for the next year or so. It looks at first as though the market was expecting some sort of dramatic announcement that never came, and in response threw a hissy fit, plunging off a cliff in a desperate bid for attention.

But then a strange thing happens, which for me is absolutely inexplicable.  The sudden drop is followed by a steady upswing over the next hour or so, of a staggering 600 points!!!!

If you compare the Nasdaq with the Dow, you'll see that, aside from the first few minutes, both are moving practically in tandem, with a Rockettes-like precision, even during the wildest and most unpredictable swings.

It is now 9:19 AM, and the markets are due to open in about 10 minutes. I can't wait to see what these performing seals will come up with today, but given what we saw yesterday, it will no doubt be totally unpredictable, wild and scary. While many economists may be breathing a sigh of relief at the remarkable upswing, as far as I'm concerned, a surge of 600 points upward should be just as alarming as a similar surge downward. Because what yesterday's antics tell me is that the market has either gone completely bonkers, or -- more likely -- is being manipulated. In either case, this is no place for ordinary people to keep their money, because an "investment" in stocks can no longer be regarded as an investment, nor even a gamble (since when we gamble we at least know the odds), but a foolhardy act of total and complete recklessness.


  1. Here's a question for DocG or any readers, more knowledgeable than this writer. Of all the Big Shots of the American revolution, the only one that I have much interest is Ben Franklin. Quite a while back, I read his autobiography. He stated that the main reason for the Revolution was that the British parliament forbad the colonies from printing their own currency. (Massachusetts had done it since 1690 or so. Eventually, the remaining 12 colonies printed their own bills of credit.)
    Either Franklin said it or I found him saying elsewhere that the colonies printed their own currency, usually without backing it up with gold. However, his state, Pennsylvania, printed just enough to keep things flowing. (The dubious magic of money!) However, when the colonials were forced to use the Bank of England, there was an immediate and excessive prosperity. However, within a year, there was massive unemployment from a severe and prolonged economic depression.
    I wonder what the other facts are involved. Is this any clue to our present boom/bust economy? Canada seems to be doing okay since they have a much more level economy.

  2. Granted I am a dyed in the wool conspiratist, but for quite some time I have felt that the stock market is a fools game and is somehow being manuipulated. Although I cannot imagine how such a thing could be orchestrated, we must remember that the world and most of its politics is controlled and manipulated by a small and extremely wealthy group of individuals. That this same small highly influential (to say the least) cabal also may have decided that it was time for a democrat puppet to be placed in the white house is a bad dream to be discussed some other day. Considering that most of the worlds wealth (let alone Americas') is concentrated in their tight little mitts it is not inconceivable that they could use market manipulations to send messages of approval or disapproval regarding world events. True, the day trading profit takers grab up bargains on the downswing and quickly sell on the way up but the overall picture just smacks of something more insidious.
    A fun fact I've been thinking about lately and correct me if I have this wrong. A lot of folks invested in the market never consider one thing.
    Hypothetical question: If you have invested in the market $100,000 and the market goes down 50% in one day and then the following day it goes back up 50% much do you now have invested in the market?
    The answer seems to be that your $100,000 became $50,000 on that bad day and the next day when the market went back up ( "surged forward ) it became $75,000. That being because after the drop you only had a base investment of $50,000 to work with.
    In other words the market would have had to go up 75% on the second day just to bring you back to even.
    If I have this right, why is this never discussed?
    When the market goes down 600 points in one day and then comes back 300 the pundits say it "surged forward in a dramatic comeback" and stuff like that. These guys on TV have a vested interest in keeping people interested in making money in the stock market. So they are also in on the fix.
    Am I missing something? Kat

  3. You're not missing much, Kat. Love your posts.

    I am thinking more and more Obama is a patsy, he's just some temporary puppet of wall street and the pentagon, and even if he's just stupid or controlled, I find myself disappointed most because he's opening such a dangerous door.

    That door is the actual election of someone like Rick Perry or Romney or even Bachman or Palin, idiots all. Am I missing something? I watch even the so-called "leftist" media in many forms and most are still under the spell of Obama. Like was this some sort of "spell" put on us back in 2008?

    Where's all of this "change YOU CAN BELIEVE IN?" He bails out the banks, the auto/oil companies, wall street and various offshoots,
    the super rich, and has been a meek mouse in
    all his concessions to the far right tea bagger
    republithug wacko de-evolutionists.

    I don't think the daily dow jones numbers are that important. Even weekly. You have to at least look at monthly or quarterly figures. The stock market has always been a gamble, but here's the thing. In the past, it was more like a smoke filled room of poker players. But this is 2011. The Dow and such has long ago been taken over by computerized technoloogy. Humans, real people, play a minor role at this point.

    And before anyone has me committed, consider this factoid I heard recently many times on the mainstream and underground media. Almost ALL stock market transactions done today are by computers, trading on various algorythms and programs, all making transactions 1000's at a time every SECOND.

    Let that sink in. If I go play a craps or blackjack table and put my hard-earned greenbacks on the line, at least I know those games are the best bets in the casino. Same with the slots. You know the odds going in, because the "house" is lawfully obligated to tell you the odds. But investing in the market? It's all a lie going in and a lie going out. A fixed game. No thanks.

    The point total gain or loss however, does not reflect actual numbers of individuals. If your portfolio is diversely funded, there is no one to one ratio, gains or losses. Your math makes sense but is not the math of Wall Street. For most people, employed by any other entity but self, the ups and downs of the market numbers are as random as the nightly lottery number drawings.

    Personally, I think graphs are overrated. Especially about economic matters. Shit, here we are in 2011 and instead of HAL 9000, we get Windows 7. Inside joke, sorry, where was I?

    I hate also being called a conspiracy nut but when the thing just up and bites you on the ass, metaphorically, I'm all in. And to make a long and boring post short, I think that if Obama is going to continue to act, walk, and look like a duck/patsy, I'm afraid to say, does it really matter if any of the Republican puke candidates beats him?

    I mean, the mainstream media and even a lot if not most "liberals" and "progressives" continue to defend him. All or most of them depending on their employers (corporations) decrees. And I wonder about this whole "cloud" this "cyberspace," and WTF is this all about, really?

    I put all of my "disposable income" into GOLD of course. No way that value is ever going to decline, unless of course water and food in that old post-apoclyptic world coming, have market worth higher than gold.

    Or in other words...


  4. I don't have an answer for you, Dave. That aspect of US history isn't something I know much about. Money is definitely a "person of interest" to coin a pun -- a likely suspect in many a crime against humanity. McLuhan said it all: the medium is the message.

  5. Kat, your analysis of the market is right on. I also suspect manipulation. I find it interesting that just after the Fed Reserve announcement, the market took a huge nosedive. And then after a half hour or so, suddenly soared by a truly fantastic amount. My first thought was that Bernanke panicked at the thought he'd get blamed if the market bottomed out and found a way to reverse the trend. After all the Fed has huge amounts of money at its disposal and can always print more when needed. They've already done a lot behind the scenes that's only come to light in the last few weeks.

  6. I agree, anonymous, there are lots of things fishy going on, Obama included. I had great hopes for him but now it looks like he is yet another hand picked servant of the moneyed class, not that different from George II. As far as the market is concerned, I agree, it's a game strictly for players NOT investors. The tragedy is that so many pension funds have felt forced to invest since there's so much pressure on them to grow. Most money nowadays is made as you say by extremely short term trades, essentially bets on volatility rather than actual profits. You can make as much money on junk as you can on a well run company, because you are betting on tiny shifts rather than steady growth.

    A strong president, such as Teddy Roosevelt or his cousin Franklin, would have stepped in months ago and taken charge of the whole sick operation.

  7. Yes anononymous, the odds in the stock market are not as good as those in Las Vegas. I got very suspicious of the market back in the 90s when all the .com stocks I had went bust. Granted I only had a few thousand invested in Janus tech mutual funds, but by the time they took out commissions and all the other stuff that happened I became very disillusioned. Also, it seemed like such a well orchestrated plan by someone or some group when, back in the (when was it?) the late 80s, when suddenly everyone who worked at any job was encouraged to put a portion of their salary in this new instrument called a 401K. The company you worked for would then invest your retirement in the stock market? Wow, my grandma who was 103 when she died, and had lived through the Great Depression (which someday may be referred to as the Lesser Depression) always said "keep your money out of the stock market...we all leaned the hard way". Now every working American for the first time in history would be invested in a market which hitherto this time was only for the ultra rich with lots of disposable income. It seemed like a set up to me but still I went and bought those mutual funds and probably would have bought the tulips back in the day too!
    Now I have 300 shares of AMD and that is all. One stock. And that is why I pose the question and try to solve it with simple arithmetic to break it down to something I can understand. If my stock drops by 50% on Monday and goes up 50% on Tuesday do I have the same amount as I had on Sunday if I cash out? I keep coming up with a big fat no.
    And it makes me wonder if all these market drops are slowly depleting the actual dollar amounts of the average persons investments in some way. While at the same time they are encouraged to invest more because "today the market surged back with a bang!"

    As for Obama ,remember that funny old saying "with friends like this, who needs enemies?" And yet I still go on loving the man hoping that this time it will be different.

  8. I can't "like" Obama anymore. As for his stint as president, it's beyond disappointing. I sometimes flashback to the "Manchurian Candidate" in a way, and there's just something not right with him. And something wrong with this picture.

    Maybe I'm becoming so far to the left, and as one who was foolish enough to fall for his song and dance one time, it's fool me once, etc. He is such a fraud, such a wimp, such a hypocrite. There are approximately 20-30-40 million Americans out of work, or those who are abled and want to work. Obama goes on vacation.

    Who the hell IS this guy? I took part in this grand, grassroots movement of believers to help this person get elected, but the economy is shit, he's put social security and medicare on the table even as any tiny tax increases on the filthy rich,
    is off the table, and he's already campaigning at tax payer's expense for a second term.

    What about ending these stupid wars and military misadventures, Mr. President? What about doubling Nasa's budget instead of trying to eliminate it? What about calling these crazy far right wing Repubican wackos for what they are? People who believe the Earth is a few thousand years old? OK, you have your stupid ass religious beliefs but these are crazies. If you don't start acting like a one-term candidate with nothing to lose, which YOU yourself said you'd rather be, then go after these goddamn fascist fucks.

    But such is my wishful thinking. And I hate it, cause I cannot be "civil" with someone or some group which argues for and fights for and financially supports, the dumbing down and the sheer exploitation of the general public.

    I'm beyond sick of the so called "left" and their various media defending Obama. Like the Fox News and such criticize him, he seems to take their idiocy as Gospel. What he needs to do is go after these fucks as hard as they have and will continue to do against him. The media though is so controlled, all by big corporations with their pharmaceutical/military industrial complex.

    This guy needs a personal pollster scientist. The vast majority is acutally on his side. If only he would stop with the silly photo ops, and quit being so civil to the uncivilized republican thugs.

    I know firsthand how the whole financial system is and has been operating for some time, and the best answer to defeating these tea party born again wackos for now is for Obama to be Obama, that individual so many voted for.

    I'd advise anyone with ANY serious money invested in the stock market to just sell now and get the best deal you can in cash. It's like that old song, you gotta know when to hold 'em, when to fold 'em, etc. I have friends who are still being suckered in by this fixed game called Wall Street. Others I've convinced to quit. The truth is, the economic health of the U.S. is hanging by a thread right now, and can swing either way even in the most irrational ways, and it can easily just break at any time with this president and this totally dysfunctional Congress.

    Hope that Obama will oversee significant change as he promised, continues to darken for me. I'm still waiting for at least one little sign that he is aware of how many good, decent people in this country are suffering, and gives a damn.


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