Thursday, 2 January 2014

Manipulation



Wall Street claims markets move randomly, reflecting the collective wisdom of investors. The truth is quite opposite. The government’s visible hand and insiders control them, manipulating them up or down for profit—all of them, including stocks, bonds, commodities and currencies. The public is none the wiser.

It’s brazen financial fraud like the pump and dump practice, defined as “artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price, then profit more on the downside by short-selling. This practice is illegal under securities law, yet it is particularly common, and in today’s volatile markets occurs daily to one degree or other. My career on Wall Street started out like this, in the proverbial "boiler room."

A company’s stock price and true worth can be highly divergent. In other words, healthy or sick firms may be way over- or undervalued depending on market and economic conditions and how manipulative traders wish to price them, short or longer term. During a trading frenzy, a stock price increases and so the capitalization of a company is suddenly more then just a few minutes or hours before? What non sense that is!

The idea that equity prices reflect true value or that markets move randomly (up or down) is nonsense. They never have and more than ever, don’t now. It is therefore crucial to circumvent the regular analysis hype, look at a company and find out the risk and complexity as a top analysis tool. There is no manipulation here, the data gives the company, stock or portfolio a face, and it is not a pokerface. The system developed by Assetdyne allows users to compute the Resilience Rating and Complexity of single stocks, stock portfolios, derivatives and other financial products.

Hans van Hoek
Partner at Assetdyne



www.assetdyne.com