Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0

I haven't completely thought this through, so everything I say is subject to change.

I have been trying to understand the reason for these wild swings in the market "post election', and to some extent, for a period of time before.

Prior to the election, I assumed the "swings" were due to the uncertainty of the outcome, but since the markets "crashed" the day after, I started to look for something else.

Since I tend to invest mostly in "Small Cap" companies, it may have seemed more exagerated to me then it actually has been, but there doesn't seem to be any coorelation between the companies Q3 results, and their movements up or down in the market.

Then I "hit" on the idea that maybe this is really about the large hedge funds trying to get the stocks they want on their year end list, at prices that will look much better than they did at the end of Q3.

Since there have been so many ETFs, Spyders, and various other index funds coming into play in a relatively short time frame, perhaps they have hit upon the idea that they could use the "Bear"funds to drive the prices of shares down, buy the stocks, then use the "Bull" funds to drive them back up.

Of course, the investment banks and other large institutional investors could use these to "exagerate" the moves, make a "gillion" trades in a day, and scoop up the profits.

Once they get the market moving in a certain direction, they could easily move the prices without actually investing a lot of money. 

As I said, this is an "incomplete" thought, but thought I would throw it out for anyone who may want to , to add their two cents, tell me I'm crazy, or say yeah, that's it.

JMO and worth exactly what I am charging for it.

In the meantime, I am using the "dips" to continue to add for the longer term, and hoping I don't make too many mistakes along the way.

Will add comments as I think this through more completely, and see if it continues.

Good luck to all.

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.