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Thursday, June 3, 1999

What If the Market Is Rigged?

by Blacknblue

Forty some years ago, when I was a teenager and television was relatively new, my father and I would sit and watch wrestling. The topic of conversation as we watched was always whether or not what we were watching was for real or was simply actors following a script.

For the last several years, I have been involved in something called safety analysis engineering and use the technique of scenario development to analyze potential accidents. This use of scenarios requires a very active imagination, and also spills over into how I generally perceive the world.

So, here is the scenario for you to consider: What if the market is rigged? Since stock prices appear to be mostly defined by the law of supply and demand, with prices typically going down with high volume, what is there to prevent organized crime from writing the script to orchestrate the ups and downs of the market by simply selling large blocks of stock back and forth between "families"? Certainly, the "sector rotation" that we witnessed during the month of April had all the high drama that we have come to expect from a wrestling match. The writers of the script are to be applauded!

It is very difficult for me to believe that some crime family is not heavily involved in the stock market, because they are attracted to money like flies are to honey. It has been said that their cash flow is second only to the cash flow of the U.S. government. It is also very difficult for me to believe that they would play any game on a level playing field.

But what a spectator sport, eh?!

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