It was a volatile past week on Wall Street with several hundred point swings up and down every day the norm.
Much of the action was driven by “the machines”. These are the companies who use computers to trade constantly every few seconds over the course of the trading day. These jackasses don't even hold a stock for more than a few seconds.
This week's action just goes to show what a casino Wall Street has become. It is no longer a place for investors to park long-term money.
That is because if “the machines” don't get you, “the boyz” will. “The boyz” are the big Wall Street houses like Goldman Sachs.
For instance, the big 400-point rally on Tuesday was due almost entirely to Goldman Sachs buying a boatload of e-mini S&P stock futures. And my guess is these futures were bought with “free money” from the Federal Reserve. “Uncle Ben” Bernanke makes sure the casino is always well supplied with “chips”.
“Uncle Ben” had already given Wall Street a nice present when the Federal Reserve announced on Tuesday that interest rates will stay at near zero for at least two years. So the flow of “free money” to Wall Street will go on for at least two more years.
There was one other interesting note this week.
Some European countries are banning short selling in their markets. Short selling often involves selling stocks or bonds that you don't own, in effect betting it will drop.
Instead of this broad ban on short selling, I really wish the Europeans would have narrowed their focus.
Everyone who is in the market knows where these “attacks” on the European markets are coming from. They are coming from Wall Street.
It's that old game I touched on last week. If Wall Street can attack other markets and make them look even worse, they can say “Don't take a chance with those 'dangerous' foreign markets. Stick with the 'safe' US markets...give us your money.”
This strategy makes Wall Street a winner twice over. They often profit from their short sales and they keep 90% of American investors at home, where it is 'safe'.
The Europeans should have just banned trading from American firms and their subsidiares until they learn to quit acting like barbarians on a rampage, pillaging everywhere and everything.