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    Is The Market Rigged? Survey Says … ‘Yes!’

    It's back to square one for the jurors in the insider trading case of hedge fund billionaire Raj Rajaratnam. Jurors will have top start the process all over again starting today after a juror was dismissed for "medical" reasons.

    Meanwhile, more evidence the stock market is not a level playing field: 47% of respondents in a survey of 400 investors from across the world found one-on-one meetings with companies regularly lead to price sensitive information being divulged, according to the Rotterdam School of Management.

    Surveys like this, along with the Rajaratnam trial, the saga over David Sokol's Lubrizoil trades and a overwhelming sense the market is stacked against them helps explain why mom & pop haven't piled back into stocks even after a more-than 2-year bull market.

    In the accompanying interview The Daily Ticker's Aaron Task and Daniel Gross discuss just how prevalent insider trading is on Wall Street with Barry Ritholtz director of research at FusionIQ.

    "It may not be completely and totally rigged but damn if the odds aren't against the average investor," exclaims Ritholtz. That does not however mean the pros are trading secrets amongst themselves. "Real inside information is actually surprisingly rare [but] I wouldn't be surprised if it's traded on pretty actively," he says.

    In Ritholtz's experience what separates the successful professionals from the average individual investor is an information edge, in terms of research and analysis, not privileged information. Most of the rumors whispered around trading floors simply don't hold water, he says. "The best of the fund managers -- they're doing their own channel checks," i.e. legitimate research on industry trends from which they make informed bets about the fate of related companies.

    Even if professionals are getting illegal tips from their one-on-one meetings, as the survey suggests, Ritholtz says there are few slam dunks, outside of inside information about pending mergers.

    Either way, it's not the way you want the markets to function.

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    174 comments

    • JamesMovieBuff  •  2 months ago
      I'm sure the market is rigged, but even if it wasn't rigged the average investor would lose. Unless you have a financial degree, you have no business investing in stocks. Don't trust a broker either, they only care about themselves. My 401k is 100% bonds. Much safer that way.
    • OPS OUT  •  Fayetteville, North Carolina  •  3 months ago
      Yes the stock market is definetly rigged using supercomputer systems that are faster than your thought process to make a trade and know exactly when to dump stocks . When the traders on the floor with that little wireless box you see them holding recieved the word they automatically dump or buy. If you notice the stock market has never, never ever been going up in the green for 7 straight days in a row, never. The lottery is also rigged using "Radeon" gas substances that keep the balls heavy that they don't won't to get picked. Every number of tickets combinations are sent to the main server. if you notice you can't buy anymore tickets after ten o'clock for you state games, why, because the server counts and place every combination based on the sun amount into the account base. If this game was random, don't you think that the same numbers would keep coming up again and again.
    • Michael  •  1 year 0 months ago
      Madoff said she wishes he could rig a Ponzi scheme as big as Wall Street has with the stock market.
    • dmitri  •  1 year 0 months ago
      Is The Market Rigged? I don't think this is the right question. The question should be "Is the Market being run by corrupt dishonest individuals?" The Crony Capitalism is the key to the market troubles that the market has experienced during the last 30 years. The question should really be - who benefits the most from the current system? I strongly believe in the free market system with limited regulation and enforcement works - look at Hong Kong. The market always regulates itself when there is no interference from the cronies on Wall Street and corrupt government officials. However, there are so many walls in the system now that for an average guy or gal it is almost impossible to become wealthy. The market now is like a side show with a rollercoaster and side show characters. As a great Goerge Carlin said ��� ���The system is rigged and you aint in it���.
    • pantherman  •  1 year 0 months ago
      ITS RIGGED,, CEO'S AND TOP EXECS GET 1000+% MY 401K GETS 5%
    • georgev  •  1 year 0 months ago
      the real rigging is the high frequency computerized traders who can deploy a phalanx of paid bashers on message boards coupled with an endless arsenal of naked short shares that can flood the market, thereby controlling the supply/demand ratio, essentially emasculating long term stock buyers and holders and pummeling them intol submission and buying their shares at rock bottom prices. I forgot to mention shock and awe stockprice drives downwards, taking out all the stop-loss orders and then allowing the price to rise again, picking up a few more shares along the way and then selling again until the price is high enough for another profitable :"Blitzkrieg" down to more stealing of shares aat rock bottom prices.-----such fun!!!!!!
      • TS 1 year 0 months ago
        Sooooo ride along with them and that's buckoo's of money for you.
      • A Yahoo! User 1 year 0 months ago
        and I thought naked shorts were illegal..............but as far as the market fluctuations up and down, excuse me but isn't that how it's supposed to happen? Manipulated or not, it shouldn't always go up or always go down.
      • Dave 1 year 0 months ago
        That's garbage. Short term traders are gambling just like the losers on stock message boards. They don't have any real power or control. If they make high returns for a while it's only because they're putting their money at risk in ways that they don't even realize. Selling shares (especially short) to intentionally drive a stock down is a losing strategy.

        If you buy shares in quality companies from industries with a long term future and hold them for 5, 10, even 20 years, you will come out way ahead of the average gambler. It works even better if you can buy them when they fall out of favor or when the overall market is in panic. As an added bonus, all that time that you spend checking quotes and reading moronic drivel on message boards can be spent doing something much more rewarding with your life.
    • Magic Dog  •  1 year 0 months ago
      It reminds me of the old days at the racetrack when the trick was trying to guess which horses had been drugged. The big houses usually tell the public to buy when they are selling. I always do my own analysis and never go with recommendations from the big players.
      • Reginal Times 1 year 0 months ago
        Obama said on Oprah the other day, "that the main focus was to get the stock market back up". All but admitting that the market was manipulated and pimped.
      • bri 1 year 0 months ago
        Chances are if it was drugged it is a Dutrow horse
      • Nanoskippy 1 year 0 months ago
        Read Fortune's Formula for the notes on the "edge"
    • Bernard  •  1 year 0 months ago
      The question should not be "Are the markets rigged?" but "Are the markets manipulated?". The answer is "Oh, yeah!"

      LookoutJoe
    • A Yahoo! User  •  1 year 0 months ago
      It's not just the insider information. It's also the hedge funds ganging up to short companies into oblivion or control entire markets via futures manipulation ala JP Morgan and the silver market.

      The individual investor is looked at as a cat to be skinned by the huge investment firms. I wonder how much of my retirement account over the past decade went into the coffers of the greedy hedge funds and market manipulators like JPM when they were months ahead of leaving a sinking equity market and, most likely, led the plunge with shorting of the markets.

      One of the previous posters had it partially right when they said that companies like Goldman-Sachs are selling when they are recommneding the genral public to buy. Not only are they selling the shares they own they are also aggressively shorting shares they don't own. The combined effect is to drive prices down much sharper than if they had simply sold owned shares.

      I am 50% in cash, 50% commodities and will not consider re-entering the market until the debt/deficit problem is under control.
      • Investor 1 year 0 months ago
        This is how Rothchilds made their money. When the English defeated Nepolian, Rothchilds recievd information 24 hrs before the announcement. He spread the word among his top oficials that "England lost". Markets in London fell, and Rothchild bought. The rest is history.
      • Dave 1 year 0 months ago
        Great insight ... JPM is a money changer and they do insider trading .... OMG did I associate them with the evil Rothchild Money Changers .... LOL
      • Dave 1 year 0 months ago
        Investor I wish more would realize the truth you speak
    • Jay Meier  •  1 year 0 months ago
      Well, what does "rigged" mean? The markets are a system of systems, each of which provides opportunities and constraints. Knowledge of these avenues and constraints creates advantage that my suggest some type of "rigged" game.

      "The Markets" as many describe it, means the Stock Market. It typically doesnt regard other markets, like natural gas. The various "markets" behave very differently than one another. The stock market is ABSOLUTELY RIGGED. Institutional investors now represent about 90% of daily trading volumes. Computerized/algorithmic trading...exclusively driven by technical analysis today....represents the vast majority of institutional trading today. Regardless, fighting the flow of that stocks market is just an unrealized loss. What you think you know doesnt really matter if the big money opposes your trade.

      You must also recognize that traders...meaning professional traders, market makers and coverage traders....are trained and so act to deceive whoever is opposing their trade. They communicate and behave in a multitude of ways to create a response by other traders that they will profit from.

      On larger trading applications, like packaged products and bonds, including the CMO markets, there is no way any outsider can know what the bankers and book-runners can know about what comprises that packaged product. You ARE going to leave something on the table every time you deal with someone like Goldman, JPM or Stanley. Not that you cant make money with them, but they will ALWAYS make money off your actions or inactions.

      They are all rigged and until you disconnect Wall Street from Washington DC, no regulatory body will ever be effective in eliminating the game-rigging.
      • Malcolm T 1 year 0 months ago
        +1 but...

        >> They are all rigged and until you disconnect Wall Street from Washington DC, no regulatory body will ever be effective in eliminating the game-rigging.

        You can never "eliminate" anything. But, if you vote for politicians usually branded (by the crooks) as "anti-business", they'll do a better job fighting and mitigating the game-rigging.

        "Pro-business" DINO's and, especially, RINO's won't do it. Only people like Bernie Sanders or Ron Paul are interested in doing it. (But, unfortunately, they don't have enough support.)
      • Charioteer 1 year 0 months ago
        When Congress under Nancy Pelosi voted to exempt themselves from insider trading, I knew it was the beginning of the end.
      • patrick 1 year 0 months ago
        The institutional traders are getting rich using other peoples money to buy in or out just before they do the same with their own, or their friends money. Pretty simple. Even trailer trash morons would be robber barons with this edge, as they seem to do well at the track when they know which horses are drugged.
    • Dave  •  1 year 0 months ago
      Many times you see a stock perk up just before the big announcement. You know someone knew something and made $. Nothing is very (or rarely) done about it!
    • Steven  •  1 year 0 months ago
      There's a steady flow of information from corporate headquarters to the market makers. Of course it's rigged. It's criminal.
    • tmandwn  •  1 year 0 months ago
      Yes it's rigged but NOT becuase 2 or 3 guys madea few million on insider trades. That is garbage for the masses. It is rigged because hedge fund and portfolio managers wink wink when its time to sell and buy. The MM's have been doing this for decades and the small investor is always the bagholder.
    • Former Yahoo Finance User  •  1 year 0 months ago
      Good interview - like this guy. No question its rigged but its rigged in more obvious ways then is reported here though. I am sure there are lots of insider "tips" which are wrong and the people involved lose money. My opinion most of this should balance or cancel out with the insider stuff that wins. When the rich make a bet and they lose then as long as the pay for it, then its good. This is the massive crime of the bailouts - everyone of them needed to lose no matter what the short term effect would have been on jobs etc. - but the crime was requiring the poor and middle class to bail them out in QE1, 2, 3, and beyond. They are protected from bad investments get their losses back or more, record profits and bonuses when they hide huge losses and law-abiding businesses comply with SOX and other crap and receive the hidden thieves of inflation, loss of the value of the dollar, and higher taxes which are still insufficient to keep up with the way they are pissing it away on spending. Its a macro level crime not micro in the details or whispers in the ears (aka. Martha Steward receiving tips from her broker). You can lose just as easy as you can make gains. Think about the absurdity of them being concerned had Martha received a tip where she lost the $40K instead of the gain - would anyone have cared? No!
      • Kristin 1 year 0 months ago
        Martha was no innocent lamb. She was a sophisticated investor and former stock broker who blatantly lied to federal agents.

        Nothing new here. The cover up is often worse than the crime.
      • A Yahoo User 1 year 0 months ago
        *Former* Y! Finance User? Welcome back!
      • sharpie 1 year 0 months ago
        Martha went to jail- why only her???
    • RICHARD  •  1 year 0 months ago
      look at past few days at 10 am each day they dive the market pick up shares then slowly ride the market upwards in afternoon only way to survive the market is buy quality companies and hold on for long term
    • YFU Number One  •  1 year 0 months ago
      People said the same thing about the glorious bull market of the 1920s - that it was rigged. Except insider trading was perfectly legal then, so they meant really, REALLY rigged. Insider information is surely being used quite often when the opportunity arises, since the temptation is great (witness Sokol's blunder) and insider trading cases are notoriously difficult to prove. They've only recently shown real progress in this area in prosecuting Raj and his cohorts. Martha Stewart was NOT convicted of insider trading; she got caught lying to investigators who suspected her of insider trading. The poor gal unwittingly wrapped up the investigation right there when they found out; from there it was just straight on to trial and prison and thank you very much Martha because we didn't want to try an insider trading case anyway because they're a pain in the butt. But again, yeah, I'm sure stuff like that goes on all the time and the market can be considered rigged.
    • Jon H  •  1 year 0 months ago
      People who reside on the top of Corporations most definitely have knowledge of that industry and if the stock is going to go up or not. The average investor like myself doe not have these insights and consequently is handicapped.

      I have worked for a major corporation for 14 years years and have seen the reality
    • Drago  •  1 year 0 months ago
      In sixties, whene you sell a certai stok say GE or GM you would have to wait 30 days before you can buy that stok again, Thus, it is this speed of trading that causes all the unfairnes to general investors. Bilions of shares traded daily isnightmare to honest investors!
    • Think  •  1 year 0 months ago
      There is no way to trace all insider info. The big players like Goldman Sachs have information and influence in the hightest echelons of the Obama administration. You can watch them and the Fed to see market manipulation on a grand scale but they get rich on the deals we never hear about.
    • Ronnie G  •  1 year 0 months ago
      Of course insiders do deals & have info that the average investor have no clue.If you are not an insider & have knowledge of the stock or company chances are is that you will loose.

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