Thursday, September 18, 2008
Open the PDF in the link below to take a look at the behavior of the Dow Jones Industrial Average in the past couple of weeks – at the fourth and fifth columns from the left. Down 345 points in one day. Up 290 points two days later, only to fall 280 points the next day, and then back up 213 points in the next two days. Down 504 points on Monday, up 142 the next day, down 449 points, and then back up 410 points today. Wow. All that motion to have dropped only 524 points in three weeks.
Will somebody please look into who’s making money on these wild swings in the stock market?
Could it be that some of this volatility is being driven, not by real market forces, but by the independent actions of buyers and “shorters” who know perfectly well how to play the rest of us, how to time their purchases and sales to leverage the news just right? Start a downward trend on one day when bad news breaks, and then start buying at the bottom, creating an upswing the next day, only to sell again at the top. What’s wrong with that? Isn’t that just the stock market doing its thing?
Certainly destabilization is a real and sometimes natural phenomenon in any speculative market, but there are lines that shouldn’t be crossed, limits, common sense and legal, on how far players should go.
Does anybody really think the professionals aren’t making a fortune on all this panic selling and buying, at the expense of the rest of us who are just doing our best to hang on for the ride? Making money off of the hysteria they help create? Actually contributing to the demise of the finance sector companies whose difficulties and failures feed the frenzy even more?