The Stock Market Is Rigged, Now for All to See. Thanks to Wall St Banksters and Their Corrupt Pet Politicians Who Set The Rules For Wall St to Steal From Main St.

Posted by freedomforall 3 months ago to Business
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Hedge funds have long done everything they could to manipulate stocks their way. Short sellers came out with devastating reports about a company. Some of the facts were true and some were false, but it didn’t matter. This is the game of “short and distort.”

The report would be released before the start of trading. All the financial media would jump on it. The short seller would appear on CNBC and explain why this stock would collapse, etc. It was all a big manipulation scheme and it worked most of the time, and at least for a brief period the stock plunged, and the short seller could take a profit. A reverse of the classic pump and dump.

On the long side, the same has been happening for eons at the highest level of Wall Street, with bullish reports about crappy companies and strong-buy recommendations, and all kinds of fabricated stuff…

I mean, just look at Tesla’s shares. The hype machine behind that stock is huge. It’s Musk himself with his promises that may materialize years behind schedule or that don’t materialize at all and were just empty promises, all of them designed from get-go to manipulate up the share price.

And there are the Wall Street banks that make a huge amount in fees every time Tesla raises money. Tesla raised over $12 billion in 2020 alone. So these banks have huge financial incentives to manipulate up the shares.

Then there is the army of Tesla fans the crawl all over the social media, and they take no prisoners. They work tirelessly to pump up Tesla shares.

The thing is as long as the shares are manipulated higher, everyone is good with it, and regulators support it. It’s the oldest game in town.

The Fed is a big proponent of it through its monetary policies. It has a word for it, the “Wealth Effect.” President Trump jumped on the bandwagon as soon as he was elected. Everyone’s doing it.

But now that millions of individual investors are conspiring on WallStreetBets to drive up share prices of the most shorted stocks to push a bunch of hedge funds over the cliff, it rattled some nerves.

But these traders are collectively also taking huge risks, and in the process, they were just about to push their own trading platform Robinhood over the cliff.

So the blame for the enormous risk appetite out there, the reckless leverage, the crazy trading strategies by hedge funds, and the huge incentives to manipulate goes to the Fed.

It printed $3 trillion in a few months – and $6 trillion in 12 years – to create exactly those kinds of financial markets where no one cares about anything anymore, where everyone is just chasing after the wildest returns, and where investors that follow prudent strategies are ridiculed and earn near-zero returns. And that’s what the Fed got. That’s where the blame is. The Fed is the biggest market manipulator out there.

Congress is now seeing a dual opportunity. On one side, the millions of infuriated retail traders that got locked out from trading the most shorted stocks. And on the other side, the teetering hedge funds that are now giving their rich clients and owners the willies.

So Congress promised to look into it. It’s doing what it knows how to do best: On one side, it’s trying to coddle up to the millions of infuriated traders that got locked out from trading. Those are the voters. And on the other side, it’s creating pressure on those hedge funds and their wealthy owners and clients to unleash a tsunami of campaign contributions to get this situation under control."
SOURCE URL: https://wolfstreet.com/2021/02/03/the-stock-market-is-broken-now-for-all-to-see/


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