The Dow Jones Performance – Is it Real or a Mirage?

So according to your numbers, the DOW recovered 68 points in the last few minutes of trading. Explain to me how this constitutes manipulation? How exactly does the market get manipulated in such a fashion anyways - lots of money buying at the close? What's the difference between the DOW recovering 68 points in the last few minutes of trading, or the DOW recovering 68 points at 2:00pm? A lot of bears screaming market manipulation during this rally and it's getting old.

 

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Kassz007: So according to your numbers, the DOW recovered 68 points in the last few minutes of trading. Explain to me how this constitutes manipulation? How exactly does the market get manipulated in such a fashion anyways - lots of money buying at the close? What's the difference between the DOW recovering 68 points in the last few minutes of trading, or the DOW recovering 68 points at 2:00pm?


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June 5, 2009

SouthAmerica: Your question shows that you never worked for a Mutual Fund or some similar type of business. Any type of portfolio that you have to price it at the end of the day using the closing prices of the NY Stock Exchange, NASDAQ, and so forth.

You don’t use the price of the Dow Jones stocks at 2:00 PM to price your mutual fund; you use the closing price at 4:00 PM. You can have a lot of stock price changes between 2 PM and 4 PM.

Let me give you a possible example: let’s say that Ben Bernanke decides to get even more creative at the Fed and he contacts people such as Warren Buffett, Bill Gross, and another half dozen big investors – he opens accounts with all these people and gives them instructions to buy certain stocks right before the stock market is going to close to push up the closing price of these stocks with very thin coordinated buying.

Many of these large investors also hold millions of shares of these stocks on their own company portfolios – If you have 5 or 10 million shares of these stocks on your portfolio then it makes a big difference if the closing price is pushed up by $ 1 or $ 2 dollars per share.

The Fed has very deep pockets and Ben Bernanke and his palls are already involved in many deals that involves major conflict of interests related to the TARP program, all the other financial shenanigans at the Fed and so on – one more questionable program at the Fed it does not matter and what is the big deal of a little coordinated market manipulation among friends?

The above scenario is a real possibility, but a group of powerful and influential investors such as Bill Gross also could play the same coordinated game and achieve similar results.

I would not be surprised to find out that they have been rigging the game as never before and very often they have these last minute stock rallies that looks very suspicious.

But even if these market manipulations are real, please don’t hold your breath waiting for some kind of government action – mainly if the Fed is involved on these staged rallies. Remember after 30 years the regulators still had no clue about what Bernie Maddoff had been doing all that time – and the government finally was able to figure out about what was going on, but only after Bernie Maddoff turned himself in and told his story.

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I see what you're saying, and it is possible you are correct and this type of behaviour is occuring. But I also think you need to provide some better evidence other than the DOW recovered 68 points in the final few minutes of trading to call manipulation. I have been hearing people say the same things you are saying since the rally started in March. There is no way that the market has gained as much as it has simply because of manipulation.

 

im not saying its manipulation nor do I care, but it most certainly can go up this much if they were able to manipulate it...manipulation isnt the act of taking the price this high, it is to induce others to take it this high. Again I couldnt give a rats ass if it is or isnt....my money in my account is the only thing i care about as far as the market is concerned. Just like they could have maipulated it on the way down to induce the floodgates of money to open up....

 

Yeah I suppose what you're saying is true. But the point I am trying to make is that until someone produces some type of evidence that this is occuring, I have no reason to believe it. Irrationality in the markets could be due to many factors other than manipulation. Calling manipulation because the DOW recovered ~60 pts at the end of the day just doesn't cut it for me. Looks more like an effort to blame bad shorts on something other than personal failure.

 

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Dow Jones Industrial Average

September 17, 2008 = 10,609.66


Then


Dow Jones Industrial Average

On June 8, 2009, GM and Citigroup were replaced by The Travelers Companies and Cisco Systems, which became the third company traded on the NASDAQ to be part of the Dow.

On September 22, 2008, Kraft Foods replaced AIG in the index.


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October 19, 2009

SouthAmerica: Last week on October 14 and 15, 2009 the talking heads on CNBC and Bloomberg TV were making a big deal that the Dow Jones closed above 10,000.

But I did not see a single talking head mention that this 10,000 level is not the same 10,000 level that the Dow Jones had reached on September 17, 2008.

Since that time AIG, GM and Citigroup were removed from that index, and these stocks were replaced by Kraft Foods, The Travelers Companies and Cisco Systems.

I would like to know what would had been the Dow Jones Industrial Average today if they added back the 3 stocks that were removed from the index, and eliminated the 3 new stocks that they added to the index since September 22, 2008.

I wonder by how much the current Dow Jones Industrial Average is inflated by these changes when compared with the Dow Jones Industrial Average including only the stocks that made up that index before September 22, 2008.

I know that today Wall Street is nothing more than a “Fools Paradise” and many people who are making a big deal that the Dow Jones Industrial Average has reached the 10,000 level are clueless that this level is a completely meaningless benchmark for all practical purposes - and it is not even a comparable index to the Dow Jones Industrial Average dated before September 22, 2008 .

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Survivorship bias.

Wall Street's been deceiving people for a hundred years with this scam.