One of my predictions for 2012 was that Wall Street and the financial markets would begin to ignore the European financial crisis, where Greece and possibly others essentially are having a hard time paying all the money that they’ve borrowed throughout the years. Last year the market would get hammered on days where anybody expressed a smidgen of fear of something bad happening.
I thought that the dust would settle and that Wall Street would move on.
I was wrong.
For a while in the beginning part of the year, the news about Europe was pretty quiet. Wall Street did actually shrug off a lot of news, but would still have the occasional freak out about Europe. In the last couple of weeks, the news is suddenly back out and Wall Street has been freaking out in earnest once again.
I believe they actually love it.
I believe in conspiracy when it comes to the stock market. I don’t trust people that do trading, and I think that there is dishonesty, manipulation,and insider trading that goes on all the time. I believe in the efficient market theory on paper, but in practice, there’s no way.
And, I think traders use Europe as a way to cover up the dishonesty that prevails in Wall Street.
Simply put, Wall Street can use Europe as a scapegoat to do anything that they want and blame ‘Europe fears’.
I’ve watched earnings reports pretty regularly. One theme that I’ve seen happen lately is that a company will blow out earnings. I mean beyond what was likely priced in, as I know pricing stuff like this in does take place. I’m talking 40 cents a share where ‘the Street’ might have predicted 12 cents a share.
The stock will even rise for a little bit in pre-market trading and then at the bell.
Look what just happened. Investors, many whom are likely individual investors (as opposed to institutional investors) just saw great news and they saw the stock start to rise. They buy in, hoping to ride the wave, not knowing that the sharks on the other side of their high speed trading computers, are snickering and reeling them in.
Suddenly the bottom drops off. That stock that just tripled expected earnings suddenly gives back the money it made at the open and actually goes down, often by a few percent.
Individual investors just got taken for a ride. Who do you think took that money and put it in their own pockets?
The crooks on Wall Street.
And when they’re asked about it, they say ‘Well, yeah, they beat earnings, but uh…we’re worried about their growth. You know, because of the whole Europe situation at all.’
They might not snicker out loud or on the e-mail that they use to publish this, but trust me, they are.
And, that, is why I was wrong about Europe and the effect it would have on Wall Street. Because while the news might be bad and there might be trouble, Wall Street has latched on as a way to skim (scam) some additional profits off the backs of investors just trying to do the right thing.
Do you think Wall Street operates on the up-and-up?