Ben Stein: How Speculators Exploit Market Fears

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From the article:

Here’s a fact: The speculators and hedge fund managers who run today’s stock market need market volatility in order to make money.

They can’t make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell — or, as they say, “sell short.” Understanding the stock market can be difficult, however, there are websites out there, like stocktrades, that can help beginners to learn all about stocks. With more and more people using the stock market to make money, it’s vital that people understand how to use it and how to find the best stocks.

That’s what’s been happening the past couple of weeks. But it’s not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.

Supposedly, the market is “correcting” because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.

These are interesting theories, and people who don’t know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these “reasons” for the stock market moves are.

Great stuff, and worth reading in its entirety.

Remember that old question, “Why am I being asked to believe this?” There’s a reason… and sometimes its not always true, selfless, or honorable… as this instance shows.

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