The Apparatus of the Stock Market

August 10th, 2023

Sucker

The components of any given market place include both physical structures set up to accommodate trading, and participants to include buyers, sellers, brokers, agents, barkers, pushers, auctioneers, agencies, and propaganda outlets, and banking or transaction exchange facilities.

Markets are generally set up by sellers as it is in their self-interest to sell their goods and services to generate private or public profits.

Should one be engaged in selling hard to sell items or novel items yet to be seen, the propaganda component of the market takes on an important dimension. Thus the field of marketing was born and over the past hundred years or so scientific studies have proven that human phycology plays an important role in the success of the propaganda being successful in guiding a buyer to the desired result by seller.

The stock market is just that, a market where stocks are sold. Should one wish to better understand the market, one can just as easily substitute the word “horse” for the word “stock” and then consider what is needed by the horse breeder in order for him to successfully sell his horses to potential and willing buyers. Perhaps a sale barn is needed, an auctioneer, and a few horse breeding experts that can describe the horses to the potential buyers in a manner that gets them excited enough to open up their wallets and fork over a few thousand bob for a good horse. There might perhaps be a barker standing outside the sale barn shouting out information to stir up the emotions of folks queuing up to enter the sale barn. On the other side of the barn, a few good looking cowgirls might be saddled up and demonstrating their riding skills in order to get potential buyers off the fence so to speak. Tables might be set up for the sale of hand-tooled saddles, blankets, bridles, cowboy boots, hats, chaps, gloves, fencing materials, horse trailers, etc.,

The whole kit and caboodle is put together with the ultimate goal of the horse breeder creating a successful market for the sale of his horses, for without the horses, there would be no need for the myriad of cottage industries that spring up around the main attraction.

Caveat; Occasionally, a dodgy horseman will show at the market with a dodgy horse to sell…and low and behold…some sucker gets taken to the cleaners….

Think about Jim Cramer. What is his real purpose in the stock market? He’s a genuine market barker. Although he claims to want to help stock buyers make money, that is not his real purpose.

The components of the stock market include the following:

Companies in search of capital
Fast talking swindlers in search of profits
Fast talking bankers in search of profits
Faster talking hedge fund manners in search of bigger profits
Stock exchanges set up to facilitate trading
Trading houses set up to operate the trading exchanges
Ratings agencies set up to give potential buyers a sense of security ( pun intended) when assessing the so-called investment worthiness of a particular stock or bond issue.
Financial newsletters, media outlets, and online websites to push buyers into the market
Government regulators in search of votes, power, prestige, and the power to fine with a stated goal of “regulating” the marketplace in hopes of keeping fraud to a minimum
Stock Analysts, phycologists, quants, marketing experts, and clever mathematicians create the propaganda necessary to overcome the common sense of the common man

All of this apparatus was originally designed to do one thing; help companies raise capital.

However, along the way, the selling apparatus has cleverly created multiple avenues by which smarter men can alleviate the sucker of his hard earned dollar without a care in the world about capital formation. In fact, some market manipulators do nothing but tear companies apart looking for the cash horde. One day, these clever bankers state: The market needs to consolidate and advise all the companies on their target list to gobble each other up, each time generating large cash fees and bonuses.

The very next day these same bankers decry consolidation and suggest to conglomerates they should sell off their components to “unlock value”, much of which ends up the wallet of said banker in the form of fees and bonuses once again.

Some of these bankers, along with market barkers, and so-called analyst have this game down to a highly profitable science, to the point they are able to bully CEOs of successful cash rich businesses into doing their bidding. We have seen this happen dozens of times. If the Wall Street NY bankers covets your success, you can believe they will soon be coming for your assets.

One of the main ways to manipulate companies into following their “advice” is to have market barkers like Jim Cramer do their bidding; i.e., shouting to the world that this company’s stock will surely dive if they don’t sell this or that asset or buy this or that company. If the market barkers are not successful, they will deploy nasty short-selling strategies to drive the stock price down. This also has happened dozens of times.

A few good CEOs that have built up highly successful companies know what I am talking about. Just ask the CEOs of Herbalife and Overstock. Overstock’s stock never rose above a few dollars per share until Wall Street successfully tarnished the name of the CEO to a point that he resigned. The stock for some miraculous reason shot up to $100 per share. Did the sales increase after the CEO departed? The answer is no. The price run-up was designed to punish the CEO for exposing Wall Street’s dirty short-selling secrets.

Sometimes the sucker is the common hard working man on the street. Sometimes the sucker is a gullible Sovereign Government. Sometimes the sucker is the “sophisticated investor” and sometimes the sucker is an idiot running a pension fund. Pension funds have the largest pool by far of readily available hoards of collected cash, thus becoming prime targets for the marketing apparatus. Much like local mayors, politicians and other bottom feeders, pension fund managers are susceptible to jet airplane rides, fancy dinners, fine wine, and an overdeveloped sense of self-importance. They can in fact be bought and sold faster than stock in the Statue of Liberty.

One fact about marketplaces over time is that it has been proven that those running the market place stand to make much more money than those owning the commodity being sold. Thus, the purveyors of Levi jeans and shovels during the gold rush, and the hotdogs and beer vendors at the local minor league ballpark understand that one can make money without engaging the hard work of mining or becoming a professional ball player.

Some satisfaction must come from the trade of ones labor and or cash for any given product in any given market place. Each human being has an intrinsic guiding mechanism that tells him whether or not the trade is worth it. For those sitting on the fence, more clever men are able to read them like a book and come up with an angle to persuade them to jump down off the fit and become a market place participant. Thus, misers are few and far between on the planet earth.

Where do you stand in the market place? If you conclude that yes you too are indeed a sucker, then the best you can hope for is to become an educated sucker. And that, dear speculator, is what this newsletter is all about.

Caveat Emptor: Keep in mind that just like the dodgy horseman selling dodgy horses, so too are there dodgy stock pushing charlatans pushing dodgy stocks…

The Apparatus of the Stock Market

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