No one is going to tell you today how market manipulations really happen, because they are illegal, but at one time they were legal and people talked about what they did. Well I’m not going to talk about it, I’m going to show you.
Before the SEC was founded stock manipulation was actually legal and there existed what were called “stock pools” that engaged in vicious manipulation.
People such as Jesse Livermore and Joseph Kennedy were involved in such pools, but so were many others whose names are forgotten today.
One of the biggest investing publications of the 1920’s and 1930’s was a journal called The Magazine of Wall Street edited by Richard Wyckoff.
I got a hold of a couple of old issues and this one from 1925 details right out in the open how stock pools operated.
If you read this issue you’ll find out exactly how manipulation happens.
To read this key article from this issue click here.
I’ll give you the short version – manipulations don’t happen with people shorting stocks and making crashes, but by people marking stocks up and then putting out rumors that big news is going to happen so they can dump.
A stock pool operated when a small block of insiders owned a large amount of shares and then took a small number of shares and sold them back and forth to each other at successively higher prices to “walk the stock up” or “mark it up.”
Such a thing is totally illegal to do today and with the data the exchanges have on trades anyone trying to do such a thing can easily come under SEC examination.
But there is no such regulation for Bitcoin.
If Congress or regulators would do an investigation into Bitcoin and crypto currencies I have no doubt that they would discover the existence of manipulation pools probably connected to some of the Bitcoin “whales.”
Once exposed such whales would be seen as virtual criminal operators when their dirty secrets are exposed.
Will it happen?
I don’t know, but here is an example.
Look at this new “ICO” crypto currency that started to trade this weekend.
It opened up with a market cap of just a few million and in hours went up to be worth over a billion and a half dollars.
A BILLION AND A HALF.
It got marked up!
That’s how a pool operates!
If this was a stock it would be halted and the people would probably end up in jail.
Will the regulators crack down on crypto scams and will people speak out and expose crypto crooks?
I don’t know (crypto community leaders are silent).
But I do know that such manipulation operations only work on the way up and when something tops out and the trend goes down they no longer function. This means that the Bitcoin cartel has lost price control.
This is just a textbook example of market manipulation and in time the entire crypto market will likely be seen as a rigged market as such things have happened all over crypto world.
Crypto currencies are not created by people looking to replace the US dollar or displace central banks, but by people looking to rip off the masses. ICO’s are junk.
Of course I don’t trade Bitcoin or crypto virtual currencies myself and am into ETF’s and stocks.
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