Friday, December 21, 2007

Jim Cramer e manipulacao do mercado

Jim Cramer elicits respect or distain
Submitted by jnorthco on Thu, 2007-01-04 11:43.

I confess to confusion. I recently watched a Wall Street Confidential
segment on The Street wherein Jim Cramer described how hedge fund
managers basically juice the market to close out their years in good
positions. I don't know whether to laud him for being so honest and
blowing the whistle on this stuff or scream at him for being the sort
of ass that created this situation in the first place. See my dilemma?

I'm not naive…the market has always be subject to the predations of
those with inside knowledge and capital. As famous entrepreneur Mark
Cuban recently said in on his Maverick blog, "The stock market is for
suckers." It makes me wonder how Cramer feels when he knows this
manipulation goes on and yet he continues to opine on various stocks
and make buy and sell recommendations using company data and history
(his much vaunted research) knowing full well that those same stocks
and futures can be pumped or squashed by some punk hedge fund manager
out to increase his year-end bonus. Screw the small investor who puts
his or her five grand into a stock Cramer recommends -- those fund
managers and investors have got Manhattan condo fees to pay.

Cramer says were he a hedge fund manager, he would have manipulated
prices to achieve the results he wanted. (See the video here)

"If I was short at my hedge fund, positioned short and I needed it
down I would create a level of activity beforehand that would drive
the futures." said Cramer. "It didn't take a lot of money. Similarly,
if I was long and I wanted to make things rosy I would go in and take
a bunch of stocks and make sure they were higher. I would commit five
million in capital to make it happen. You need perhaps ten mil in
capital today to knock stuff down, but it's a fun game. A lucrative
game. You can move it up and then fade it, that can create a negative
feel…you boost the futures, then the real market comes in to knock it
down and that creates a very negative view. It's a strategy that is
very effective. I would encourage anyone in a hedge fund to do it.
It's legal. It's a quick way to make a lot of money and it's
satisfying. No one would ever admit to this. Although I'm not going to
say that on TV."

Jim is at least honest, although this would seem to be skirting the
prohibitions on market manipulation or fomenting.

"Hedge funds are positioned long/short unlike mutual funds that are
positioned long; so it's vital that you manage the market, it's vital
for your payday that you don't let the market lift." Cramer continues.
"Take Research In Motion (RIM) you can't let that rise like it has.
You need to use a lot of your firepower to knock that stock down
because it's a fulcrum stock. If I was short, I would hit a lot of
guys with RIM. You can't foment and you can't create by yourself an
impression that a stock is going down. That's a violation SEC rules.
But you do it anyway because the SEC doesn't understand it. It's
blatantly illegal, but hedge funds that are down have to be more
aggressive. It's important to foment the impression that RIM, for
example, isn't good. When you see an offering you would hit this guy
and that guy. If I wanted to go higher, I would take and bid, take and
bid. If I wanted lower, I would hit and offer, hit and offer. It might
cost me ten million to knock down someone like RIM, but it would be
fabulous because it would beleaguer all the moron longs. If you are in
bad position it's important to get people talking about RIM as if
there is something wrong. Get the Pizzanis of the world talking
negatively about it. Then you call the Journal and get the bozo
reporter to do a story on PALM and some new product giveaway of
theirs. It's the sort of thing you must be doing at a hedge fund today
and if you are not maybe you shouldn't be in the game."

So, there you have it -- break the law, juice the market and feed
disingenuous info to the "bozos" of the media. Nice. So again my
dilemma; respect for Cramer's honesty or distain for the fact he was
one of the architects of this system.

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