Specialists Use Of The Media By Richard Ney

Specialists Use Of The Media The Media and its control: You have heard all kinds of information on the stock market, either in the daily paper, printed media, or TV / Radio programs. The majority of that information is absolutely worthless. Like the heads of major brokerage firms and money center banks, the press lords and heads of network broadcasting (like Laurence Tisch of CBS who was on the NYSE’s board of directors) are major beneficiaries of the exchanges price fixing. No matter how disastrous the consequences are do to specialist price fixing, nothing is allowed in newspapers or on television that might help the investor or diminish the high level frauds that allow specialists to buy and sell for these insiders. What you read or hear is no more than propaganda meant to condition you to either buy or sell in order to facilitate the buying and selling of Exchange Insiders. Financial news is only useful, therefore, if it is used as a contrary indicator. The media is a very strong arm of the Stock Exchange. They are used to rationalize the frauds of the Exchange. The roll of the Media in this organization is extremely important and equally as devious. The Stock Exchange feeds the information to the press and the electronic media. To this end they are able to supply the public with the news, and analysis of experts that they want the public to hear, whether truthful or not. The news and information that is supplied to the media for the public to hear is geared to persuade the public to react in a way that will be most profitable to the specialist, and other Stock Exchange Insiders and least profitable to the investor. And equally important, by supplying the public with

reasons for the stocks price movements, attention is always diverted away from the specialists. Everything that comes from the Stock Exchange directs attention away from the markets movers and shakers. It is also important to note that what you read in the financial sections of the paper, whether it be here at home or in the Wall Street Journal, or others, is all geared to keep you in the market at the highs while specialists are unloading their inventories of stock and selling short, and while they themselves are in the process of exiting the markets. The same holds true at the markets lows. When the news media continually flashes news articles of “Bear Market”, this is the time to be buying not selling stocks. They want investors to sell their shares of stock regardless of the price losses, and make it look as though “Dooms Day” has arrived. The truth is once the dust and smoke have cleared from investors stampeding to the exits in panic, the markets move dramatically higher. A perfect example of this would be if the markets have been in a major up trend for several months in a row. When you read comments such as “Market Rally Continues”, and “Volume has reached a six month high”, and “stocks are retesting their 52 week highs”, it is time to be selling not buying into the market place. If you follow the information that the media supplies, you will always be on the wrong side of the market. If they are “Bullish” it is time for you to look to sell. If they are “Bearish” it is time for you to buy. If you follow this simple strategy you will make money on a consistent basis. One of the primary ways specialists are able to organize public opinion is by training them to accept the market’s conventional

wisdom from the moment they speak to their first stockbroker (who is himself trained to perform like an auto matron).

Exchange wishes him to adopt that it becomes all but impossible for him to think the market could move in any other way.

The second thing the Exchange does when a person enters the new world of investing into which his high hopes have brought him is to control what he reads and hears in the financial media. The information the investor obtains from his financial page shapes his attitudes towards the market in general and towards particular stocks. That information can cause him to act while in a state of euphoria, so that he either purchases or is persuaded to hold onto stock, or to act while in a state of despair, so that he either sells or is persuaded to remain out of the market.

How The Media Operates At Major Turning Points In the Market

What investors do not understand is that these effects are deliberately contrived. The information has been engineered in timing and in content to cause him to take one or another course of action, which in due course causes him, to self-destruct.

If It Looks Like a Bear and Walks Like a Bear, Chances Are That the Bear Market Has Arrived

There are several levels on which this manipulation of the media can be seen to assist specialist’s plans for the distribution and short selling of stock or its accumulation or short covering. In the widest sense, through its news bureau, the Stock Exchange seeks to develop a consensus, albeit incorrect, among investors as to general direction of stock prices by disseminating whole articles of media bits to outlets such as The Wall Street Journal, The New York Times, the PBS news shows such as the Nightly Business Report or the Dow Jones wires services. The articles often contain banner headlines, which burn into the investor’s consciousness an attitude toward the market in much the same way a rancher brands the cattle that belong to him. As investors move past the headlines and into the article, they find enough authoritative quotes and data supporting the attitude the

To see just how dangerous these articles can be to you if you adopt the market stance that Stock Exchange specialists want you to take, it’s instructive to look at some of the most important headlines from past Wall Street Journal articles. In the vicinity of the Dow’s absolute lows, in 1987 the following headline appeared in the “Heard on the Street” column, arguably the most widely read financial column in the country:

It stated that, “Attention Investors: You are now entering bear market territory . . . A decline that pierces the 2400 level would make this a bear market by almost anyone’s definition . . . Based on precedent, the decline will carry stock prices considerably lower. In bear markets stock prices typically fall about 38% and the decline usually lasts about 19 months. If a bear market started in July - - and it proves to be of average ferocity - - investors can expect the Dow Industrials to drop to about 1860 by the end of next year.” Shortly thereafter the Dow was dropped under 2400. Undoubtedly there were tens of thousands of readers who, after seeing this column, were convinced that the recent lows market the onset of a major decline when, in fact, in marked the end of the decline which had been covertly conducted for more than a year. Investors, fearing there would be even further shrinkage in the value of their portfolios sold en masse.

Specialists were there to scoop up the stock that most investors were selling and happily stashed that inventory into their trading and investment accounts in preparation for the rally they launched after a low was established in October. As stock prices were slowly rallied off there October lows, the Stock Exchange had to do whatever it could to keep investors from buying at what were levels far below those where specialists wanted them to make those purchases. One of the ways they accomplished this was to keep psychological pressure on investors with articles in the Journal’s November 21st “Heard on the Street” column titled as follows: A Bear Market Rally? It Sure Looks Like One That article went on to state, “Bear market rally: a temporary increase in stock prices within the context of a longer term decline. Also known as a sucker rally. Based on market history, technical indicators, and the economic environment, they [experienced market pros] say this upturn has classic hallmarks of a bear market rally.” It’s clear that the purpose of this piece was to transmit the message to investors that November was not the time to be buying stock and that they should play it safe by remaining out of the market. Of course, any purchases made even at that point would have paid off handsomely in just a few months. How Financial Reporting Affects A Particular Stock Thus far, we’ve been showing how the Stock Exchange uses the media to develop a consensus about the general direction of the market. However, the media fulfills another important role. When the Stock Exchange wants to help a specialist or

group of specialists accomplish a specific merchandising objective, the media often is recruited to assist in the effort. It is actually used to transmit to large numbers of investors news which the specialist knows will have a predictable affect on investors and if it is framed in such a way that it enhances the impact which this information will have on the investing public. The most obvious example of the media acting in its capacity to effect a particular stock is when an earning’s announcement is pending. Wide circulation of the news, good or bad, subjects large numbers of investors to a simultaneous wake-up call. Then, depending on whether the Exchange wants investors to buy or to sell, it will tell them how to react. For instance, when Minnesota Mining and Manufacturing (MMM) released its earnings in late January 1991, large numbers of investors were told the results were “disappointing.” It’s fascinating to see how the MMM specialist used this announcement to his advantage, for even before the news was released, he had dropped the stock several points from the previous day’s close at $85. By the time the announcement was made and investors had a chance to react by predictably throwing in their sell orders, its specialist had dropped MMM nearly 5 points. For the balance of the trading session, the MMM specialist continued to pick up stock from the selling that had been caused, in part, by the media’s transmission and characterization of the news. The reason the MMM specialist wanted to accumulate a large inventory was because his stock is a component of the Dow Industrial Average. This specialist knew that he was going to be asked to help propel the Dow Index higher in the coming weeks by advancing his stock sharply. In order to make a profit during this advance, he wanted to make sure he had inventory bought at a low, which he could profitably

dispose of at higher price levels. Like the town crier bringing news of a catastrophe, the media’s portrayal of the MMM’s earnings as a negative helped induce the investor selling which gave the MMM specialist the inventory he desired. The media to precipitate the public buying or selling that a specialist is looking for can quickly spread almost any news item ranging from a new product announcement to the initiation of a lawsuit against the company. The critical point I would like for you to have learned from this is that you must take what you read or hear about the market with more than a grain of salt. Try to imagine how most investors would react and how that reaction could play into specialist merchandising plans. This will give you another source of insight into the merchandising objectives of specialists which when all is said and done, must be correctly ascertained if you are to invest profitably. Specialist Use Of The Media Specialists use the media to fluctuate the Dow like air currents moving a hot air balloon. They use times of great disaster to their advantage. I will now present you with two examples of how it works. First: In 1963 specialists were in the middle of a long-term bull run, which would last until the middle of 1966. When the news of President Kennedy's assassination came across the news they could have closed the market because they new the public would panic and do to the uncertainty of there future would sell large quantities of stock to raise cash. This gave them the opportunity to acquire massive quantities of stock at bargain basement prices, which they could unload during the continuation of the advance over the following two years. With this in mind they left the Exchange open, and the public did just as expected, they

sold stock like crazy. Second: In 1981 when the attempt was made to assassinate President Reagan the news flashed across the country like wildfire. When the news hit the floor of the Exchange specialists were again confronted with the option of what to do. They could have left the market open and absorb massive public selling, or they could close the market. Since they were in the midst of forming a top in the Dow, which would occur in late October they wanted to unload inventory from their long-term accounts to the public and not acquire it so they closed the market. They didn’t want to pick up stock from the public until prices were much lower. Thus when they re-opened the market the next day they rallied to Dow up 20 points when the news was positive about the presidents recovery and continued until the fall when they started the decline they wanted