Monday, August 13, 2012
Finding Value: Manipulation
There is almost nobody out there who believes or cares if the markets are manipulated. There are more people putting up youtube videos accusing Bush and Cheney of demolishing the Twin Towers than there are sounding the warning about market manipulation.
The amazing thing is - this is in the face of MF Global Scandal, the Libor Manipulation Scandal, the Knight Capital Scandal, Operation Twist Rate Manipulation Policy, the fact that the Fed buys 70 % of all newly issued debt, The Plunge Protection Team, and the fact that 70 % of very light NYSE volume is accounted for by Supercomputers that front run your trades! If that's not the definition of market manipulation, I can't imagine what is.
Still, if you raise the specter of Market Manipulation everyone from the Big Banks to little tiny traders who wish they were like the Big Banks roll their eyes and turn up their noses, and call you a conspiracy theorist and a whiner.
Why? Because if they admitted there was Market Manipulation then all of their little SECRET RATIOS that have ACCURATELY CALLED TOPS AND BOTTOMS for the last UMPTEEN YEARS would be valueless. All their stochastics and mean reversions and Fibonacci retracements and sentiment indicators would be a joke.
So don't believe me. Don't worry about it. Have fun trading - which these days just means donating your money to the guys over at Goldman Sachs. They believe in market manipulation. Happily. Every last one of them. And believe me, they're ecstatic that you don't.
Meanwhile, I'll stick with what's worked exceptionally well for the last 10 years, and will work exceptionally well for the next ten:
1/3 cash (you have to pay your bills). 1/3 gold bullion. 1/3 high grade rare gold coins. (for the last substitute any high end collectible you understand well).
Value is value is value.
Trading is fun. But it has no value. Unless you're the one manipulating the markets. Then it's a great deal.