Thursday, February 14, 2013

Richard Wyckoff method: Proof that Stocks Are Commodities for Fraud

Richard Wyckoff method

The Wyckoff method proves to me that stocks are like commodities contracts. I have believed this to be so for many years. They are governed in price by supply and demand of the stocks themselves. This is similar to commodities futures contracts, where the contracts are what drives the price, not necessarily underlying supply of the commodity itself.

Great damage is done by hedge funds who manipulate these markets by driving up and down the price of the stocks, regardless of underlying fundamentals. Be they stocks, bonds, and now more than ever, the housing market, the Wyckoff method is used by hedge funds and private equity to shake out the weak hands who buy high. The goal is to buy low and sell high.

At some point then, to take from the principles of this article, the housing market at the top will be sold by the hedge funds and the housing prices will crash. This is a slower process, to be sure, than stock manipulation, which can be done in days or hours with high frequency trading mechanisms.

I cite this article for two reasons. It may be possible, for someone with deep pockets, to play with the big boys and some may be interested. But the second reason I post this is because it is highly risky, as the liquidity needed to play this game could be large. Watch out small investors!

Clearly, as I posted here, this method of stock manipulation is a fraud, a scam against the rest of us. And it has been played for centuries in some way or another. 

With regard to housing, I have said that the housing market is broken, as the 20 percent down thirty year mortgage has virtually disappeared. The hedge funds are buying with cash and we have easy money loans for the rest of us. This puts housing square in the way of massive manipulation by the predators. And this will do great damage to mainstreet.

For that reason I say, boycott mortgages unless you know you are at the bottom and don't use an easy money loan to buy at the top! 

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