Stock prices can be affected by numerous factors and criminals, using less than ethical means can get stock prices or a particular company to go up or plummet. They'll make some quick profits, head off elsewhere and do the same thing. According to the writer of the article linked to below, the Securities and Exchanges Commissions can do nothing to stop such criminals. http://www.businessinsider.com/crim...et-and-regulators-cant-seem-to-stop-it-2015-8 On May 14 a Bulgarian stock schemer is alleged to have moved the share price of consumer company Avon Products by making a false filing to the Securities and Exchange Commission. Three months later, nothing is stopping someone else from doing the very same thing. The Avon M&A escapade is far from the only example of crooks using false filings in an to attempt to dupe a bigger cross-section of market players. Stock market fraudsters have also tried to dupe reputable public relations companies with false reports in hopes of catching investors off-guard.
The DOW is not a measure of th he economy. Because it does not use VWAP it is subject to manipulation/painting with closing trades. And no one looks at the sources of revenues for the component companies to see what is driving their numbers. So if GE out performs and it's all from new foreign markets and overseas expansion, no one is willing to say, the US ecosucks sucks. We are told that, with the DOW at record levels, it looks like the economy is headed in the right direction and improving.
I have heard a few accounts of criminals altering stock prices by manipulating public speculation. Although unethical and possibly disastrous for the business I would argue this method could be used for the companies benefit with the risk of added bad publicity.
The stock market is where it is largely because of 7 years of Federal Reserve QE and keeping rates at zero. The economy is very fragile, and this is the most tepid recovery we've had since WW2. If the economy was doing so great, rates wouldn't still be at zero, we'd have more growth, more labor participation, wage growth, better industrial production, more businesses starting up than folding, etc.
Whilst talking about criminals and the stock market, here's some more news. A number of traders hired hackers to steal information not available to the public and used it [the information they'd obtained illegally] to make more than $100M. http://www.marketwatch.com/story/tr...ay-stock-market-to-net-100-million-2015-08-11 Over five years, two computer hackers living in Ukraine broke into U.S. newswire services including Business Wire and PRNewswire and stole more than 100,000 press releases for publicly traded companies before their release. Those documents, which included earnings data, were distributed to a network of traders who used the advance knowledge to buy or sell securities based on how they anticipated the market would react to the announcements, according to the Securities and Exchange Commission complaint . . .
Like in any walk of life, there's always going to be people that don't play by the rules or try to manipulate a certain situation to their own advantage. The stock market is no different, and while it is hard to stop people, I do think financial crimes like this are being investigated even closer than they was before. These days you can hardly switch on the news without hearing about how somebody somewhere as tried to manipulate stock or massage interest rates in a certain direction, so at least authorities are cracking down on this behaviour, even though I doubt it will ever be entirely eradicated.
This is something people should lookout for. Many criminals are smart and they know what their doing.
This is a great example of why we should not react to any type of financial news in regards to how we handle our own investments. Think long term, and all of this will wash out in your personal portfolio. The market will bounce all over based on all different types of news and if you try to get ahead of it, you stand to lose every time. Buy quality, dividend paying companies for the long term, think like an owner of the businesses you buy shares of, pay attention to the fundamentals, and hold for 10 years minimum as long as the fundamentals stay sound.
