All rallies are phony. All selloffs are real. Every plus-1% day is manipulated. Every down-1% percent day shows the market's true colors.
That's the conventional wisdom, especially these days where the path is set in cement: stocks must go down and rates go up because all that mattered the whole way up were the actions of the biggest manipulator of all, the Federal Reserve.
Take yesterday, for instance. I hate up openings -- those big up openings on nothing but good foreign news. But down openings where everyone sees the gloom and the gloom only, those are made for reversals and that's just what we got.
Once the market reversed, Ben Bernanke picked that moment to have a conversation with his go-to guy, John Hilsenrath, in what was a master stroke moment where the bears were busy betting against the big, phony rally because the truth about rates, and therefore stocks, is now out of the bag.
So, Bernanke manipulated the market, right?
When I suggested yesterday that Bernanke picked a terrific time to spread the gospel that you can't presume the tapering is soon upon us, initially people were suspect. Did I believe the Fed did anything substantive? Was I that naïve?
Darn it all, I am anything, if not naïve. What I was saying was Bernanke has learned to play the game. He knew his words were going to have an impact because he wasn't trying to stem a decline. He was saying basically, "look, intelligentsia, I know your game, you think I am done, think again."
Those who believe that he is too unsophisticated or doesn't know the impact of his words; he knows all too well the impact and he needed to undo his testimony of a few weeks ago.
So, the rally gained steam and people realized that rates can go both ways and Bernanke's not happy with the velocity of the move.
Now, on to the charge of manipulation. My take's pretty clear. The truth is an abstraction. When it comes to the market it really doesn't matter if something is true, what matters is that people believe it is true. Does Bernanke really have the power to contain rates? Maybe, maybe not. But with rates down yesterday and Bernanke squawking, how can you believe that he is impotent. More important, how do you know that the trader next to you doesn't believe he's for real and says we gotta cover and we gotta cover now?
Which all comes back to the first point about whether one market is true and the other market is phony. I have lived with this ridiculous dogma for 14,000 phony Dow points. I have lived with this fanciful judgment during the fabulous runs for so many stocks. All I can say is that nothing's phony if a bid can be drilled for a stock that moved up big on the phoniness. Nothing. If you are able to sell a big piece of merchandise at a good price, what's phony about it?
Of course, my view is viewed as having no rigor vs. the views of those who know it is all a big, rigged market. But the joke's on them. You see, I don't care who rigs it. I don't care what's real. What's wrong? What's different? What's fresh? What's stale? What's known? What's not known?
All I care about is what's working. That's because I am not a bull or a bear. I am a practical person who accepts manipulation on both side, who understands that people lie and cheat and do what's ever necessary to make money. I have said that before and gotten in big trouble for it by speaking about how I have seen it done, not how I do it or did. I just want it to be known that it happens and I want people to be able to see it and game it for what it is worth, a wave to ride to profits, and nothing more.
But also, nothing less.
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