wisdom from the moment they speak totheir first stockbroker (
who is himself trained to perform like an auto matron
).The second thing the Exchange does whena person enters the new world of investinginto which his high hopes have brought himis to control what he reads and hears in thefinancial media. The information theinvestor obtains from his financial pageshapes his attitudes towards the market ingeneral and towards particular stocks. Thatinformation can cause him to act while in astate of euphoria, so that he either purchases or is persuaded to hold ontostock, or to act while in a state of despair,so that he either sells or is persuaded toremain out of the market.What investors do not understand is thatthese effects are deliberately contrived. Theinformation has been engineered in timingand in content to cause him to take one or another course of action, which in duecourse causes him, to self-destruct.There are several levels on which thismanipulation of the media can be seen toassist specialist’s plans for the distributionand short selling of stock or itsaccumulation or short covering. In thewidest sense, through its news bureau, theStock Exchange seeks to develop aconsensus, albeit incorrect, amonginvestors as to general direction of stockprices by disseminating whole articles of media bits to outlets such as
The WallStreet Journal, The New York Times
, thePBS news shows such as the
NightlyBusiness Report
or the Dow Jones wiresservices. The articles often contain banner headlines, which burn into the investor’sconsciousness an attitude toward themarket in much the same way a rancher brands the cattle that belong to him. Asinvestors move past the headlines and intothe article, they find enough authoritativequotes and data supporting the attitude theExchange wishes him to adopt that itbecomes all but impossible for him to thinkthe market could move in any other way.
How The Media Operates At Major Turning Points In the Market
To see just how dangerous these articlescan be to you if you adopt the marketstance that Stock Exchange specialistswant you to take, it’s instructive to look atsome of the most important headlines frompast Wall Street Journal articles. In thevicinity of the Dow’s absolute lows, in 1987the following headline appeared in the“
Heard on the Street
” column, arguably themost widely read financial column in thecountry:
If It Looks Like a Bear and Walks Like aBear, Chances Are That the Bear MarketHas Arrived
It stated that, “Attention Investors: You arenow entering bear market territory . . . Adecline that pierces the 2400 level wouldmake this a bear market by almostanyone’s definition . . . Based on precedent,the decline will carry stock pricesconsiderably lower. In bear markets stockprices typically fall about 38% and thedecline usually lasts about 19 months. If abear market started in July - - and it provesto be of average ferocity - - investors canexpect the Dow Industrials to drop to about1860 by the end of next year.” Shortlythereafter the Dow was dropped under 2400
.
Undoubtedly there were tens of thousandsof readers who, after seeing this column,were convinced that the recent lows marketthe
onset
of a major decline when, in fact,in marked the
end
of the decline which hadbeen covertly conducted for more than ayear. Investors, fearing there would be evenfurther shrinkage in the value of their portfolios sold en masse.
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