Let us be thankful for the fools. But for them, the rest of us could not succeed.
Mark Twain 1835-1910, American Humorist, Writer
Let’s start off by looking at a predator in the wild, a Jaguar. When there is plenty of food, all the Jaguars can feed well and relax as there is plenty to go around. If one looks at the situation from the prey’s side, it seems unfair. The poor deer is just trying to get a drink of water or eat some grass, but each time it has to play Russian roulette with its life. If the Jaguar were eliminated from the equation, then you would have too many deer, and this would result in overgrazing and a severe constriction of the existing food supplies. So the Jaguar is needed to maintain the equilibrium. If suddenly the number of Jaguars goes up, then we have another imbalance and the existing food supply is now threatened (not enough deer to feed all the Jaguars). Once again nature intervenes, and the weakest Jaguars start to die off; only the strong ones remain.
Applying the above analogy to the markets, we get the following:
The Jaguars represent a few sophisticated investors, big brokerage firms etc. Their function is to wait and watch the deer (masses) get nice and fat; then they strike their fatal blow. In this case, the markets crash when the masses are net long or suddenly take off when the masses are net short.
Then you get times when the food supply is thin, and so even the Jaguars are now threatened as they start to turn on each other to survive. (By the way, this is what has been going on in the markets for the last few months). This is when you see big companies go down (Long Term Investment Capital is an example.) and many big investors suddenly find themselves penniless. The Jaguars that survive this period of hardship emerge even stronger, leaner and will feed ten times as much as soon as the supply of food is replenished to equilibrium levels.
Taking it one step further, in the good old cavemen days we had to worry about wild animals attacking us and either we ended up killing them, or we were killed in the process. So perhaps the markets are just an extension of the kill or be killed lifestyle our ancestors were once subjected to and whose genes we still carry. Fast forward: instead of hunting or defending ourselves against wild animals, we are now hunting each other because the amount of food out there is limited. So the only way to survive is to make sure that the masses are kept fat and stupid. Thus, when the fatal blow is delivered, there will be ample food to get the predators through the coming winter.
When everyone screams that the markets are manipulated, they are looking for someone to come in make sure everyone wins. In this case, it’s just another form of socialism as everyone will remain thin and will not feed well. We all know nothing is fair in life, that in most cases it’s not your studies, but a matter of who you know that helps you climb the ladder. As the number of participants increases, so will the so-called level of manipulation because even more individuals are now competing for the same food supply. In the end, this ratio is king; 90% must and will lose to sustain the remaining 10%. This ratio will never change; no amount of whining or screaming will help you. The only escape is to become a predator or perhaps a parasite and ride on the back of the predators.
The best way to win this game is through education, training and pray that all your neighbours don’t do the same as then it will make your odds of winning even harder. Manipulation is here to stay. We are the only ones that will die off and die off with most of the lessons we learned. That’s why history repeats itself.
Some examples of manipulation and how we keep quiet about them:
- Being fooled into believing that one must do everything possible to save for one’s retirement. In other words, give up the best years of your life to try and enjoy the worst years of your life.
- Absorbing all the rules that come with your culture. Were you given the option of studying the rules in several cultures and then come up with your set of rules?
- Being told that working like a dog from 9-5pm is the right thing to do and that doing that for 30 years plus is what life is all about.
- Being told that higher education is the key to everything, in many cases, this higher education is the worst education one can receive. However along comes Tom, the neighbourhood idiot and oops his Pa just happens to know the CEO of IBM. Tom now has a 6-figure income and drives a top car, while you slave away after graduating with honours.
- Being told that the American dream is to buy a house with a 30-year mortgage strapped round your neck, to give you the illusion that you own the place. If that same money were to be invested in an investment yielding 5-8% a year, you would be far better off.
Conclusion; Overcome and profit from Market Manipulation
You know the markets are dangerous. You know that most people lose and yet you still enter. Oh yes, you are going to be the lucky one that strikes gold. Yet you enter without educating yourself, armed with nothing but your innocence/stupidity you think you can take out all the seasoned predators; when you get bitten, you scream. You have two options: stay out and live the safe life or jump in, but do so with the knowledge that you will be attacked several times and that you will most likely lose the first couple of rounds. However if you spend some time educating yourself before and while you are going through those painful experiences, you can emerge victorious down the line. Every war is nothing but a composition of battles and sometimes one has to lose several battles to win the war. So next time you get ready to scream, redirect this wasted oxygen to your brain and sit down and work on a plan. This way you might find a way to join the winners.
It is by the fortune of God that, in this country, we have three benefits:
freedom of speech, freedom of thought, and the wisdom never to use either.
Mark Twain 1835-1910, American Humorist, Writer