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The only words that I can come up with to explain this type of stock price behavior after seeing something similar happen time and again through
years are ‘brainwashing mantra at work.’
I think I would be remiss if I didn’t at least mention mother of all mantras – mutual fund, though I hesitate to mess with this mantra. (They being soooo big in investor’s minds, and me just being a lowly gadfly on a dinosaur’s butt; it really shouldn’t matter what I say, one way or other.) As I write this, some are in such a mess - caused by illegal trading practices costing investors tens of millions of dollars. One mutual fund has been fined $100 million, another $125 million. I wonder where they’ll get money to pay fine. I believe all investors in a fund pay fund’s operating expenses, as well as fund’s marketing and management fees. They are called ‘hidden fees’ (I don’t believe there is a hidden ‘fee-fees’- this would be a fee that enables you to pay fees - naw! Don’t laugh- one mutual fund recently had been fined 450 million for ‘hidden fee’ practices). It is really, at time of this writing to early to determine if mutual fund industry has been ‘riding a good horse to death.’
There is an enormous amount of investor dollars supporting some whopper salaries on Wall Street. Just recently (the summer of 2003), Richard Grasso, once former head (CEO) of New York stock exchange was forced to resign, after his salary for past 2 years were made public. His salary - 12 million a year for past two years, a check for $48 million, which his advisor suggested he return (which he did) and a pay-package of $139.5 million (which he hasn’t returned, as of this writing-mid-2004 and a lawsuit to recover some of monies is pending). Now, that is just one man’s salary on Wall Street and it is certainly good work if you can get it! Where did all this money for his salary come from? If money didn’t come from investor’s dollars, why were Pension fund managers so outraged by Grasso’s salary that they threatened to pull billions of Pension fund dollars from New York exchange? I really don’t know where money came from to pay his salary. What I do know is one place where money for his salary didn’t come from, and that is from Stockopoly investor. Not one cent!
For more excerpts from book ‘The Stockopoly Plan’ visit http://www.thestockopolyplan.com
Charles M. O’Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book ‘The Stockopoly Plan’, soon to be released by American Book Publishing.
