Stock Manipulation: Boon, Bane, or Just Noise?

Stock Manipulation: Profit or Peril in Market Games?

Nov 30, 2024

“Let us be thankful for the fools. But for them, the rest of us could not succeed.”
—Mark Twain

Yes, stock manipulation is real. It exists as a neutral force—neither inherently good nor bad—and, in its twisted way, serves a purpose.

To understand its role, let’s consider a predator in the wild, like a jaguar. When food is abundant, the jaguar thrives, maintaining a delicate balance with its prey. But if the predator population balloons, equilibrium collapses. Nature steps in, and the weakest predators perish. In financial markets, manipulation operates similarly, shaping the ecosystem by rewarding the strong and culling the weak.

Human markets differ from nature because they’re governed not only by tangible forces but also by cognitive biases. Enter the bandwagon effect—a psychological phenomenon where individuals irrationally follow the crowd. Stock manipulation thrives on this lemming-like behaviour as investors abandon critical thinking to chase trends or fear missing out. In this way, manipulation feeds off human psychology, turning biases into profits for the few and losses for the many.

Just as the jaguar’s presence controls the deer population, market manipulation forces equilibrium—sometimes painfully, sometimes profitably. The question isn’t whether it should exist but whether one is prey or predator in this relentless cycle.

Once again, nature intervenes, and the weakest Jaguars start to die off; only the strong ones remain.

Stock Manipulation and Mass Psychology

Applying the above analogy to the markets, we get the following: the masses are the Deer; they want to find a way to grow fat without doing much. Even worse, they want to build lots of money for a time when they least need it. This period is called retirement. What is hugely amusing is that everything is sacrificed, such as good health, youth, pleasures, etc., to put money aside for a time when practically nothing works as well as it once used to. If the masses are so happy to kill themselves slowly, why should it be terrible when the predators come in and do the same job but 100 times faster?

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, and 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 even the Jaguars are threatened as they start turning on each other to survive. (By the way, this has been happening 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 more vital and 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 troglodytes days, we had to worry about wild animals attacking us, and either we ended up killing them or we were dead 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, predators will have ample food in the coming winter.

When everyone screams that the markets are manipulated, they seek someone to ensure everyone wins. In this case, it’s just another form of socialism, as everyone will remain thin and 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. Ultimately, 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. Stock Manipulation exists and will continue to thrive; the crooks will always find a way to break the rules as the jackpot is enormous.

The best way to win this game is through education, training, and praying that all your neighbours don’t do the same, as your odds of winning will be even more complicated. Manipulation is here to stay. We are the only ones who will die off, and we will 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 allowed to study the rules in several cultures and then come up with your own set of rules?
Being told that working like a dog from 9 to 5 p.m. 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 one can receive. However, along comes Tom, the neighbourhood idiot, and oh, his Pa just happens to know the CEO of IBM. Tom now has a six-figure income and drives a top car while you slave away after graduating with honours.
You are being told that the American dream is to buy a house with a 30-year mortgage strapped around your neck to give you the illusion that you own the place. If that money were to be invested in an investment yielding 5-8% yearly, you would be far better off.

Conclusion

You know the markets are dangerous. You know that most people lose, and yet you still enter. Oh yes, you will 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 time educating yourself before and while going through those painful experiences, you can emerge victorious. Every war is a composition of battles; sometimes, one has to lose several fights to win. 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.

Now, we will demonstrate why market manipulation is inconsequential. All that is necessary is a pencil and ruler and some understanding of the concept of trend analysis. (You have to spend time learning this. However, the concept is straightforward, and in the future, we will be putting up some free lessons on our site)

Let’s look at the most manipulated market in the world: The Gold Market.

If you are familiar with fundamental trend analysis, all the nonsense about manipulation can be put to rest with a pencil stroke. The red lines represent downtrend lines, and the grey ones represent uptrend lines. So, if you look at the last hyper-bull phase, you will see two grey trend lines; one could have sold or shorted the gold markets when either trend line was violated. We use monthly charts; the moves can be timed even better if one uses weekly or daily charts.

Go long gold in 1977, sell at the end of 80 or 1981 when the primary uptrend line was broken. Go long again in the middle of 1982 and sell around the beginning to middle of 1983. Go long in 1985 and sell 1988. Go long in 1993 and sell in the middle of 1996. Go long again towards the end of 1999 and sell in early 2000. Finally, hold until the end of 2001 or early 2002. However, we might be close to generating another sell signal.

Of course, if you do not know trend analysis, then this will look a bit difficult, but remember, you cannot play any game without learning the rules. Trend analysis is not that complex to learn, and if you are going to play in one of the most dangerous areas in the world, you owe it to yourself to spend more time learning and less time whining.

It is by the fortune of God that, in this country, we have three benefits:
Freedom of speech, thought, and wisdom are never used.
Mark Twain 1835-1910, American Humorist, Writer