Sun 18 Mar 2007
I’m amused sometimes when I stumble on things like this…
Bill Cara pointed to an interview that Jim Cramer recently did on “professional juicing”, or basically manipulating markets to help your positions… Here it is from You Tube:
Watch the interview, and notice Cramer’s preference for starting rumors to help move markets.
Now take a look at this news story that broke on Friday… a rumor that Barrick might buy Newmont Mining. Note that the rumor started in Business Week — which would be a bit more sophisticated rumor-starting…
Should it surprise anyone that Friday was an option expiration day (a quadruple witching, no less), and that there were rather large open interest positions in the March calls before this rumor broke?
Don’t think that Cramer is the only person on Wall Street who understands the value of a good rumor, and don’t think that people are above playing tricks to manipulate stock prices in the short term…
March 19th, 2007 at 7:18 am
This was very enjoyable, but I found myself taking pause with my enjoyment when I realized that Jim Cramer has become a self-promoting celebrity and this might just be a continuation of his persona building. He’s a really smart guy and I don’t doubt that he’s used rumor, but this interview practically implied that he turned out rumor after rumor to make his billions. I initially was thinking that you cannot just tell lies and expect to be listened to on a consistent basis – for your rumor to have some weight time and time again, you need to be somewhat reliable. I initially thought that if he consistently fed the reporters and bloggers exactly what they wanted to hear they would stop listening–that they won’t listen to you unless you have some credibility and have proven to be a reliable source. But that’s ridiculous: of course they’ll keep coming back for more lies – it’s their bread and butter and there’s a million ways to explain away rumors that never materialize.
If you can skillfully push out a rumor into the proper channels while providing some very short-term market manipulation that can provide a toehold for the rumor to make it appear that insiders are reacting to it, then you can make out like a bandit. I bet Jim Cramer formed a symbiotic relationship with some reporters who loved devouring his yarns, as they helped these reporters write articles that got lots of eyeballs (and thus sold lots of advertising).
This video was a great find and enjoyable to watch. The only way I can think of countering these rumors is to simply think on longer time frames. In the heat of the moment, practically no news outlet is immune to the manipulative effect of a good story. Since rumors travel so rapidly, even a news outlet that uses multiple sources could be duped into validating the rumor into a news piece because it spreads so rapidly that practically every source that the reporter uses is “contaminated” with the rumor. Plus, with instant access online news and 24 hour news outlets, rapid entertaining reporting (which sells advertising best) is the favored reporting style over rigorously validated stories that take time to develop properly.
What’s great about Jim’s discussion of the rumor effect is that it’s clear that he and others can and do play the system like a piano. I bet it’s quite a thrill to watch your rumor unfold and develop into an opportunity you both made happen and anticipated.
Again, I’m left wondering what the little guy can do…
March 19th, 2007 at 2:59 pm
Could rumors of Google’s phone be yet another example of a manipulative rumor? Check out Washington Post’s counter article: http://www.washingtonpost.com/wp-dyn/content/article/2007/03/19/AR2007031900964.html
And Google’s stock has been sliding downwards for about 2 months now…could this be an attempt to boost it up a little?
April 12th, 2007 at 8:39 am
Here’s more suspicious fodder…
http://dealbook.blogs.nytimes.com/2007/04/12/doubts-pile-up-in-gold-fields-bid/
The private bidder for GFI (it was up 11% on the bid rumor) may not exist.