I hear variations on this theme from people who fall into two categories – those that don’t really understand how the markets work, and those that spend a lot of time on reading/listening to political viewpoints.
My response is this: How do you suppose someone (or even multiple people) could control a $14 trillion market of anything? Where is the pressure point where that somebody could apply pressure to make one thing or the other happen? And, if such a thing is possible, why aren’t the same people routinely making money off it? Lastly, why does it matter? The S&P 500 is up ten times in the last 30 years, not counting dividends, and everyone who was invested got to participate.
What About The Oil Markets?
I usually hear this every time the price of oil goes up, but never when it declines. Oil is a fungible commodity, produced in many different locations, from the US, Venezuela, Russia, Saudi Arabia, China and many other countries, including many European and African countries and even Aruba and Panama. This is a $1-$3 trillion market, depending on the price of oil. For every speculator buying a contract, there is another one selling.
Every time you read incendiary fodder trying to convince you the markets are rigged and we should all be quivering in our bedrooms sitting on mountains of cash (or, shudder, gold/silver etc…I’ve heard it all), please think of the following: Are fewer patients going to buy anti-depressants and heart medication in the coming months? Will there be fewer visitors to WalMart? Will you stop going to Starbucks for coffee? Will mothers stop buying diapers and baby wipes and organic produce? The great companies of the world are what produce stock market returns, not market manipulators. Any manipulation of prices is very short term, such as the flash crash. Long-term investors, which everyone reading this is (or should be), need not concern themselves with normal, daily, expected volatility.