Arken

Well, except for why this is some sort of conspiracy, I guess it's clearer, but others have addressed that so I'll leave it to them. Thanks for clearing the rest up though.

pug846

Unless, of course, you are invovled in the conspiracy as well. Where were YOU during this time period?

Optional

Guys, I don't think he was saying that the entire rise and fall and bounce of Yahoo was one massive swindle...

He was saying that after the stock fell off the tech cliff, just like all the other tech stocks, it was insider trading that halted the fall at $10.00 (rather than, say, $0.03); and when it bounced, just like all the other tech stocks, it was insider trading again (with the same insiders) that rose the price to $35.00 (rather than, say, $30.00). I think.

Am I right ruy?

-me

Ruy Lopez

Thanks for your replies guys and gals. Need to correct something in my first post. I used the phrase "modus operandum" . It should be modus operandi, the same way casus belli is correct and casus bellum wrong.

Guys, I don't think he was saying that the entire rise and fall and bounce of Yahoo was one massive swindle...

Appreciate your trust Optional but I was saying the entire 1997-2002 move of yahoo was a swindle. This will be explained as I answer the other points made.

Not speaking from a lofty high ground, look at the stock chart for a company called PMC Sierra (PMCS) and ask if I should have believed the analysists when they said it would hit $300...

It's good you brought up the issue of short covering Happy Wonderer; it is a major force in pushing prices up.There is a very good example in PMC Sierra.

http://investor.pmc-sierra.com/ireye...=300&layout=-6

Set the link to show "Time Frame at 10 years" and "Frequency at Monthly". We all know that US stock indices topped on Jan. 2000. PMC Sierra topped with a spike on March 2000 when all other stocks were dropping sharply. Why? This is evidence of insider manipulation. The insiders saw the thinly held stock being sold short heavily. With their cash reserves, they bought up the stock from $175 to $250 and scared the hell out of the shorts. The average market trader Joe wouldn't have thought of buying up the shorts. He would not have the resources nor know the status of outstanding shares. The insiders have both. Does this make sense Mortal Wombat? This is not a crime though. I only demonstrated the presence of organized insiders.

"Should you have believed the analysts?" It is not a matter of believing but rather testing for oneself. Here is how I would have handled PMC Sierra if I were in your place.

Assume that you purchased Sierra below $100 and you saw it streak towards $200. Analysts say it will hit $300. The most sensible advice is "do not sell a rising stock because one does not know the extent of its advance". Only the manipulators of the stock know that information. Always place an automatic stop loss or stop profit order behind the advancing price--at a distance you have pre-calculated during quieter moments. If the stock soars to $1000, you're still there; you would be out when it does a dramatic reversal and hits the stop order.

From Kinross:

Buy low sell high. When did this become a crime???

There is no criminal activity involved. Just irrational buying.


Nice shot to divert fire from the real issue.

Just a brief diversion. My purpose is not to start a crusade to jail manipulators but to help lurkers and those who sent me pms. The thread's title does not really reflect my sentiments. It should have read "How to avoid being a victim of stock manipulation". or better still "How to profit from stock manipulators?"

To the issue. Under US law it is a crime to profit from insider information. It is also a crime in many countries to engage in "simulated stock sales" disguised as armslength transactions. Both of the above were violated in Yahoo but it is extremely difficult to prove in court.

Aside from legal issues, what was perpetrated in Yahoo Inc. and many other internet/infotech stocks violates society's generally accepted norms of fairplay, sportsmanship, basic decency and the express purpose and objectives of equity investment as provided by law. Now for the reasoning behind the aforementioned assertions.

Organized insider groups transgress norms of fairplay because their very presence in the market "changes the rules radically without informing the other smaller average players or participants". Deceit and misdirection are surreptitiously introduced into the arena without others knowing. A proper disclosure of an insider group would sound like this: "We intend to enter Yahoo etc...;we have funds or a war chest of 100 billion expandable to 200 billion with standby credit from Citicorp and J. P. Morgan. We have the capability to set stock prices over a wide range of the price spectrum. We have knowledge of intra-company and intra-industry affairs. We would like to join you in the market". How many investors, do you think, would be left if power groups disclose their presence as implied by the Securities Law?

"Interventionist" forays into specific stocks by insiders require planning, engineering, initiation of hostilities and continuous maintenence of operations until the enemy is incapable of producing further profits for the group. Here is how a typical insider group would operate.

An assessment is made if indeed a major bull market is imminent.

1)The group would choose a stock where they already hold a large percentage of outstanding stock. Thus they have insider info.

2)Calculate the amount of war chest needed taking into consideration the owners and amounts of stock held outside the group.

3)Accumulate more stock at lowest possible prices through passive posting and buying. If the war chest is 50 billion, enter half of the amount at these low prices.

4)When overall market timing is right, start buying more aggressively by hitting seller prices. When the price starts to move briskly, the group would typically buy, say 5 units while selling 3 units at the same time to conserve capital. There are already enough participants eager to buy up the stock.

5)A point is reached when the market is in a runaway or stampede stage. The group now tries to avoid a net injection of cash wherein the purpose is just to keep the price rising. This is done by buying and selling the same amounts (simulated trades).The group probably uses a dozen different brokers; 6 are buying while six are selling.

6)At some point up there the group switches to a net seller position. They are now buying 3 units for every 5 sold.

7)The group is now preparing to unload the huge block they bought at the bottom with 50% of the war chest. Their average cost is $7.oo and the price is now $220 and rising. The group spread rumors that the company's earnings are expected to triple year-on-year and a much larger company is interested to merge. the Yahoo-crazed public and fund managers are agog issuing orders to "buy at market".

8)The group has expert market technicians who know how to read charts and market momentum. They see that the Dow's upward momentum is weakening. Time to sell.

9)While the Yahoo rumors are at a crescendo, the huge block is gradually sold over a period of weeks and even months; not too much at a time just enough.

10)The stock crashes as the group stays out of the buying column. They are now short selling their own stock. If outsiders short with them, they could decide to squeeze them; it depends on the amounts.

11)The next job is to decide where to defend the stock or stop the freefall. In this case they stopped it at $10.

The Taipans in my country are not too different from America.s captains of industry. Who would not be attracted by the prospect of turning 20 billion into 200 billion in 3 to 4 years?

Have I made a case?

Bill

Not in my opinion.

As others have noted, the entire market has exhibited virtually the same curve. These curves are a product of the well-known collapses of a number of companies, including K-Mart, Enron, Worldcom, Global Crossing, and a host of others that didn't collapse, but had to weather some sort of a major upset or another, one of which involved the replacement of the President and Chairman of my former employer, Sprint.

There most certainly was manipulation of Enron and Worldcom stock of the sort you discuss. However, the impact upon Yahoo is reflective of those upsets. It does not necessarily mean that Yahoo stock was similarly manipulated, and as things sit, I don't see any evidence that Yahoo's stock was, in fact, manipulated.

You've made the same error that many private investors make by analyzing an individual stock without subtracting out the effects of the overall stock market (which was moved by Enron, Worldcom, and a host of other scandals). Once you perform the proper mathmatical subtraction of the overall market trends, then I feel you will see that Yahoo exhibits virtually the same sort of a "random walk" pattern that most similarly-capitalized stocks exhibit.

== Bill

Ruy Lopez

Bill;

As others have noted, the entire market has exhibited virtually the same curve.

No. The curves of the Dow 30 are radically different from the tech stocks' curves.

These curves are a product of the well-known collapses of a number of companies, including K-Mart, Enron, Worldcom, Global Crossing, and a host of others that didn't collapse

Not quite. A handful of rogue companies and the host (how many?--100, 200) of companies having difficulties do not satisfactorily explain the curves and current market status. There are over 2500 companies listed on US exchanges. Stocks rose to stratospheric heights way beyond their intrinsic values. They would be unstable there; they'll only rest at equilibrium value. In Yahoo's case, it is between $3 to $5 per share unless something drastically better happens to the company.

You've made the same error that many private investors make by analyzing an individual stock without subtracting out the effects of the overall stock market (which was moved by Enron, Worldcom, and a host of other scandals).

Not aware of any notable error on my part in this thread so far. Your explanation of the error is not clear.

It's somehow of a letdown that you are not convinced but the burden of proof is on me. We can continue the presentation as there are a few key ideas not yet discussed.

To understand why insider "management" of prices (manipulation is a judgmental word) is required to produce the recent stock mania of all time, the following realities need to be taken to heart.

1)Stocks have inherent bedrock values measured in 3 ways: PE ratios, dividend yield and price to book/replacement. Stock prices always return to these values after bouts of euphoria or despair. Fund managers and semi-literate investors are drilled on these fundamentals that it would take extraordinary forces of fear and greed to pry them away from this default position. This implies external intervention of a power in the market much greater than even the more financially qualified investor.

2)Growth of US GDP, creation of wealth and profits was mediocre in the 80s and 90s. There is absolutely nothing here to justify the bubble. Yet stock prices flew. Irrational exuberance or buying falls short as an explanation; it's only the tip of the iceberg. I'll explain more later.

3)Actual trading mechanics reinforce the inertia for prices to stay in the default position. On the board or charts, stocks usually fluctuate within a range, say between $17 and $20, for days or weeks. Not being insiders, even the more wealthy traders would cringe at the prospect of buying up all the sellers at $20 and $21 to enforce a breakout. Fear pervades.

So who usually punctures resistance levels to enable a stock to rise from $20 to $100 where along the way there could be 12, 15 or more of these defense lines, some of them very strong? That's easy. People who have no fear because they know the script and thus the future. Once resistance is overrun, the public rushes into the new trading range. That's how stock prices go up- step by step by step under the guidance and the battering ram of the price manager. That also means the "price manager" is frquently active and present. Many stocks always have price managers and during tumultous bull markets, almost all of them have.

Much of the time and most of these price managers do not engage in illegal activities. It is the vicious type perpetrated on Yahoo and other stocks with similar chart configurations that is abhorrent. It is a naked display of overwhelming financial power similar to the US invasion of Iraq.

Secular bull markets do not come as surprises. Astute Taipans and captains of finance and industry know when they are coming. I bet Warren Buffet knew; he was fully invested in the 80s and 90s and now has $42 billion in cash or equivalent. He advised long ago buy and hold. As the bull starts to flex its muscles, word and perceptions spread among the elite. They have plenty of time to prepared their respective price management operations. Usually one takes care of the stock wherein one has large holdings already.

Preparations include media blitzes, coordinated advice given by analysts, brokers and economists working for the elite, spreading of rumors and most of all the necessary market intervention to remove investor fear and instead feed greed--"see the market is very strong; resistance melted like butter"

Let's go back briefly to the Yahoo chart and I'll relate some highlights of the price managers.

http://www.wsrn.com/apps/charts/index.xpl?s=YHOO&data=G

The upswing phase of the bubble took 37 months to peak at $250 but only 15 months to crash to $12. This can be explained by the modus operandi I described in the third post. Before the peak the "managers " were still on the buying side; afterwards they were shorting the stock mercilessly. Outsiders could not offer any resistance; they were simply overwhelmed by a superior financial power.

Take a look at the month, Dec 1999, another display of power as the stock rose uninteruptedly from $110 to $220. Do you know how this is done? The manager uses several brokers where he is both buyer and seller at the same time. Some people call it kiting but I'm not sure it applies. The manager posts selling orders with different brokers at prices that are successively higher and higher. His other brokers on the buying side do not bother to post. They hit the sell orders successively pushing the price higher and higher. This produces an effect of euphoria and greed on the public; they do not want to be left behind. Meanwhile the manager is not expending financial resources anymore. He himself bought what he sold.

This Yahoo chart pattern cannot happen without a price manager. Impossible. That's how I know what happened to this stock and any other that looks like this. It would be indeed overly simplistic to say that irrational buying is the cause of the bubble. You would be missing a lot of the action.

Hubble head

It looks like the perfect crime - as long as everyone involved keeps quite.
I always failed to understand the craze people had for pop ups and banner ads -especially when most the world was still on dial up.

When the world got the news that most of this advertising medium is ignored and many would still rather pick up a phone and talk to someone rather than punch in gobs of personal data to a globally connected system it was too late. The insider bandits had already dashed with the cash.

I can't believe people are buying into it all over again. Its worse than a pyramid or MLM scheme.

Ruy Lopez

Request for clarification [/b]Hubble head[/b] or anyone. Grew up only with a slide rule and Texas Inst' calculator and am unfamiliar with tech people lingo. What does this mean?

I always failed to understand the craze people had for pop ups and banner ads -especially when most the world was still on dial up.

When the world got the news that most of this advertising medium is ignored

Specifically, pop ups, dial up and advertising medium.

Hubble head

Dial up =connecting to internet over phone line. This is 10-20x's slower on average than digital or cable high speed access. It makes things like putting a resume on Yahoo or buying a book off Yahoo an incredibly time consuming effort.

Pop ups -ads that suddenly appear when you go to a website like Yahoo that advertise something not on that website. Tiny Cameras, Loans, Bigger...whatever. They take up bandwidth and slow a dial up connection even more. On high speed connections you can just close them out or always buy blocking software but those options weren't so common a few years ago.

Banner ads. What some fools actually thought would pay for their ingenious website and make them some extra coin on the side. An ad you can click on that is on the page you want to veiw -usually at the top. Associated with page (like Yahoo car webpage would advertise gas booster product) but not part of it. Again-something that slows your surfing down and is mostly ignored by users.

The advertising medium is the way the message is delivered. E-mail spam, unsolicited pop ups, annoying flashy banner ads -all distractions from your actual pupose on the internet. Some do work on certain sites for certain things but the cost for these placements was much much higher in the 90's when website companies pulled out inflated hit reps (because many did not undrestand web surfing behaivior yet) that tricked advertisers into thinking they could get more attention for a better rate than other ad mediuiums like radio or TV or Magazines which cost a lot more.

Now ad co's know most of these are ignored, the portals like Yahoo know ads alone will not keep them afloat and are trying different things but I still think most of it's pretty hokey.

Ruy Lopez

Thanks Hubble head. My educational level just shot up several rungs. Now I know why net businessmen do not explain what you just did. It's like stocks, brokers and analysts do not tell it straight why stocks go up and down.