ditto to the above posts by landis and whitster. Next you need to realize that the FED isn't trying to save the stock market. They are preventing a credit market collapse. We function on a fractional reserve system. Banks lend out much more than they have. A liquidity crunch puts this in jeopardy and there can be runs on the banks' reserves. If banks go bankrupt then many people are hurt and the economy stalls. The FED may be independent in a political sense, but they are not unbiased. Their job is to keep the expansion phase going without letting inflation get out of control. They accomplish this through monetary policy, because fiscal policy doesn't work as well in a large country with free-floating exchange rates. Anyway, is the market rigged. No! That is an excuse of losing traders. The FED is simply doing its job. One can argue whether their method is the most effective, but they are doing what is generally accepted as the most effective way of protecting against a currency crisis. They really don't care about the stock market. The stock market reacts violently because of trader speculation. The FED doesn't care about this.
here is something i herd jim cramer say one time on his college tours: "when i was running my hedge fund, if we wanted to start a rumor to push a stock up/down, we'd pay off the media to spin a false story about xyz stock, then go long or short when the news was released" that was not an exact quote, but it had something to do with the media and how they use them to influence market moves. cm
-------------------------------------------------------------------------------- Quote from Brandonf: Coz thats how markets have worked for as long as there has been markets. Markets top when the news is the best and they bottom when its at the worst. At this point we have the Fed bailing out all the idiots who took on the subprime dirt that we are all worried about, so wall street is throwing a party. Don't worry, Wall and Broad need not lose a cent, Main will take it on the chin for em! -------------------------------------------------------------------------------- I want to explain what I mean by this point, that they are taking on the dirt and Mainstreet is going to bail out the greedy bastards again. Traditionally the will only take US backed securities as collatoral from a bank when they give money, that means Treasuries, Fannie Mae, Freddie Mac. They would not take crap backed by Sub Prime Loans, but over the last few days that they have provided the $35billion into the market, they have not taken in Federal paper because there is a flight to quality and high demand for that right now, instead they are letting the greedy pigs use their worthless Sub Prime Backed notes as collatoral on the loans. So, WE (that means the taxpayer) will take it on the chin again so they can buy $10 million 2000sq foot apartments "In the City". Great game indeed. Brandon
Im not making a reference to the FED here when I say, of course its rigged, in many ways. Specialist stealing is just one of many examples.
Because psychology also plays a huge role in the stock market. People will stampede over each other to get out of the door causing bloodshed. By "supporting" the market, the idea is to prevent psychological decisions from influencing economic decisions on the part of investors. If the market is overvalued, you want an orderly exit for only those that "must leave".
Blue Horseshoe loves Andicott Steel fwiw; Cramer is an FUNDAMENTALIST INVESTOR... paying off the media says much about his stock picking acumen.
short term yes, long term no. This means longer term trends are not manipulable while shorter term movements are manipulated all the time.