Thursday, January 5, 2012

Stock Manipulation

Stock Manipulation... I hear people cry about it all the the time. It begs the question why would you put yourself in a position that lends itself to that?

Reflecting back on my 25 years of investing experience, I feel sympathy for those who don't know any better and none for those that do..

So for the benefit of those who don't have a great deal of experience in the market, stock manipulation does happen.

How to avoid it?
1. Buy stocks with decent liquidity
2. Buy stocks with good fundamentals
3. And just as importantly, buy stocks with the expectation that you may have to hold them for a while. "the cream always rises to the top" and that has never been more true than in the stock market. The great value investor, Benjamin Graham said in "the short term the market is a voting machine, in the long term it is a weighing machine"

To be fair, there are times when buying a strong small company with a low volume of shares traded is not a bad idea. The risk is that it is easily manipulated. However if you are in it for the long run, eventually the stock price will meet it's value-just expect that the time frame of that happening can vary.

And finally for those of you who don't know the purpose of this blog, it is to chronicle my attempt to double $10k in the market in less than one year, here are the results so far:

Start Date: 12/12/2011
Starting balance: $10k
Current Balance (interday): $11,602
Gain: 16%

And just for laughs, I predict the next day's move in the market everyday:

Prediction Record 7-2
Winning Pct. 78%

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