Stock Market: Analysts Know What They're Doing

This column has discussed the sometimes eerie behavior of the stock markets on more than one occasion, but the market's most recent gyrations cry out for comment.

Although most people couldn't be more bored by the daily doings of the business community, I've always found them to be fascinating (or at least since my days at New York University, 1958-64, when I dallied in management, accounting, marketing and advertising.)

By way of explaining why the market interests me -- I assure you it's not because of the millions I have invested -- I once worked for the Commerce and Industry Association of New York, where I became familiar with some of the world's largest companies.

Watching the Financial Parade

This sparked my interest in business, and it wasn't long before I found that following the antics of the stock market is a great way to watch the financial parade.

I've marveled at the way stocks behave when there's news affecting companies -- or when there's no news! I've been amazed by market analysts' comments about specific companies, industries, markets and economies. But the recent strange occurrences have taught me a great deal.

Stocks Behave Inexplicably

Stock prices are affected by many things. While earnings and potential are major factors, such things as price-earnings ratios, sales outlook, competition, quality of management (often based on a single executive) and the economy, among others, have significant impact. Nevertheless, the way stocks behave is inexplicable.

Individual stockholders (the little guys) buy a few shares of a stock with the hope that the company's sales and earnings rise. But, too often, a company announces earnings have doubled or tripled, elating stockholders -- until they find their stock has tumbled on the news.

Dubious Explanation

Analysts explain the fall by saying sales and earnings are not likely to remain at such extraordinary levels.

Meanwhile, the little guy sees other companies report disastrous sales and earnings, but those stocks leap higher, based on analysts' statements that improvements are expected in the next quarter.

If a stock rises on expectations that sales and earnings would be higher, you'd expect some adjustment downward if a disappointing report comes in. But, often, that's not the case.

Techs Don't Follow the Rules

Then there's the tech stocks. Any stock that has anything to do with the Internet is regularly pushed higher -- these stocks don't follow the rules. They have risen en masse through the ceiling without explanation. Few of them have any earnings whatsoever.

Analysts tout some stocks and industries for weeks, pushing their prices up -- but, generally, their prices fall suspiciously not long afterward. Somebody made a lot of money on the moves!

As a market watcher from the outside -- I'm no Alan Greenspan -- I have to wonder: Who's minding the store? It appears stocks are being played like a fiddle.

While there are occasional investigations and arrests in connection with insider trading and market manipulation, we wonder: Are regulators watching the markets closely enough?

I wonder.

I wrote this column as a "My View" for The Hour newspaper of Norwalk, Conn., on Aug. 22, 1998. I now write my views on a wide variety of topics on HubPages. To view my HubPages Profile Click Here

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How Stocks Are Manipulated in the Market

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Comments 17 comments

Chef Jeff profile image

Chef Jeff 8 years ago from Universe, Milky Way, Outer Arm, Sol, Earth, Western Hemisphere, North America, Illinois, Chicago.

I've neither lost or gained millions of dollars, nor even millions of pennies, in the market, but I have often equated it to a nervous chihuahua dog after drinking it's fifth espresso.


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

Or swimming in a shark infested pool, Chef Jeff. Too many unsuspecting investors have jumped into that pool without knowing they were simply shark bait. Thanks for the graphic comment.


Constant Walker profile image

Constant Walker 8 years ago from Springfield, Oregon

William, Thank you so much for this hub. I'm an idiot when it comes to this stuff, I usually just can't seem to grasp it in head, you know? And I even read an entire book about it, trying to teach myself how it all works - nothing! But, reading this hub is absolutely the FIRST TIME I've ever understood what I've read about the market. It was great! Clearly, all it takes is the right person to explain it.


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

If you're an "idiot" about the stock market, Constant Walker, I'm an idiot about computers, the Internet and all the things we have to do to promote our hubs. Thanks for the nice comment.


Constant Walker profile image

Constant Walker 8 years ago from Springfield, Oregon

I'm no tech, but I'm pretty good with computers. Let me know if I can help.


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

Thanks, I appreciate the offer. One of these days I may take you up on that.


Constant Walker profile image

Constant Walker 8 years ago from Springfield, Oregon

Any time. Also, I've got Vista, and have no problem with it. It came with my new PC. So, if you have any queries. Let me know.


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

Thanks, again. I will.


donnaleemason profile image

donnaleemason 8 years ago from North Dakota, USA

I never had enough to lose so I wouldn't dabble, may as well buy a lottery ticket.

Great hub William.


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

If you don't risk too much, Donna, you can have fun while learning quite a lot about business and the economy as well as all the "doublespeak" you hear from the brokers and analysts. I'm glad you enjoyed it. Thanks.


compu-smart profile image

compu-smart 8 years ago from London UK

I have no idea of stock markets! but do have PC knowledge and i would also love to trade tips n tricks;)

Another interesting read william!!


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

If you lose your way in the stock market, compu-smart, you also lose your shirt. If you lose your way in cyberspace all you have to do is hit the Escape button and start all over again -- and you've still got your shirt!


CherylTheWriter profile image

CherylTheWriter 8 years ago from Humble, Texas (the ultimate oxymoron)

The dotcom tech bubble in the late 1990s was a great time to invest in stocks, so long as you weren't the last one left holding the baby! I was there and I remember, oh dear me, do I remember.

Now I'm into currencies and I'm still observing the decency laws. Have you ever played in that field, or am I out in left field?

Analysts know what they're doing. The rest of us shuffle our feet.

Good Hub, WFT. I'm enjoying your columns from "those days."


William F. Torpey profile image

William F. Torpey 8 years ago from South Valley Stream, N.Y. Author

I've never got involved in currency investments, CherylTheWriter, although I gave it some serious thought a few months ago. I did make money on the currency market, however, in one way: I always use Canadian dimes as ball markers on the golf course. I had a small cache of Canadian dimes I used for that purpose when they worth about 6 cents. That investment has brought me a very nice percentage gain (I still have the dimes.) I'm very happy that you are enjoying my old columns.


compu-smart profile image

compu-smart 8 years ago from London UK

lol, thanks for these wise words of wisdom!!;)


Glenn Stok profile image

Glenn Stok 3 years ago from Long Island, NY

It's true that the stock market seems to be a game that has no rhyme or reason. The strange behavior that you discuss may very well be a result of the well-known saying… buy on the rumor and sell on the news.

This would explain why stocks don't continue to go up after good news comes out. It may also explain why stocks that reported bad earnings start moving up, due to rumors of better things to come.

You made some very important points and I agree with the video you have here, that there seems to be a lot of manipulation going on.


William F. Torpey profile image

William F. Torpey 3 years ago from South Valley Stream, N.Y. Author

Thanks for commenting, Glenn Stok. It seems to me it's too easy for brokerage houses, market analysts and others to pump the prices up or knock them down -- and then jump the other way at the right moment to make a bundle. The little guy doesn't have a chance.

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