A recent rundown of Scandals in the Business world.
California electricity market:
Huge run up in electricty rates generated millions of dollars for companies while consumers paid through the nose. It was later revealed the market had been manipulated by some businesses forcing the price to go higher artificially as if in a bubble market.
Tech Stock Crash:
Companies like Nortel and Worldcom saw their stock prices zoom higher until it was later revealed that fraudulent accounting practices inflated their books. Investors saw their money dissappear almost overnight as the stock prices crashed and the tech bubble burst.
Enron:
Another giant company manipulating the power market and creating false companies in a bid to manipulate their stock price. Company eventually goes bankrupt.
Housing Market 2006-200??
Manipulative mortgage practices and sub-prime mortgages pandered to investors worldwide created a housing market bubble. House prices tumbled and millions of people lost their homes after the sub-prime market collapses and the credit industry problems cause world-wide havoc.
The point here is that there appears to be a pattern. Whenever we see a huge run up in the price of something recently, it seems to be followed by a huge and dramatic drop-off as a result of some kind of manipulation that occurs outside of market forces. We have seen a huge run up in the price of oil recently. The question I ask, is this...is this price increase due again to some kind of manipulation, or is it only market forces at work?
I don't know but based on recent history of these bubbles I'd say it's something to at least think about.
Btw, the US just announced it has been investigating US oil price manipulation for the last 6 months. No charges have been laid but stay tuned!
Originally posted by uzlessThis is an interesting idea that you brought up. But I don't think your analogy of the tech stock crash is a particularly good one to use for your discussion. Yeah, there were a few companies like Worldcom and the "crooked E" that were guilty of accounting fraud, but the tech stock bubble had built up long before those few companies decided to commit fraud. Who knows, maybe Worldcom helped to burst the bubble a little faster, but the bubble would have burst regardless of these companies. (Note that the market peaked in March of 2000, and Enron's stock price didn't start declining significantly until early 2001.)
A recent rundown of Scandals in the Business world.
California electricity market:
Huge run up in electricty rates generated millions of dollars for companies while consumers paid through the nose. It was later revealed the market had been manipulated by some businesses forcing the price to go higher artificially as if in a bubble market.
Tech Sto ...[text shortened]... g US oil price manipulation for the last 6 months. No charges have been laid but stay tuned!
No, the tech stock bubble was simply a modern-day market mania. When people would willingly pay 75, 100, and even 150 times earnings for companies that weren't even cooking their books, it wasn't too hard to see that the bubble was probably going to end badly. (Luckily I saw the tech stock bubble for what it was and managed to avoid it.)
Whether the oil market has been manipulated to some degree, I have no idea. I'll just have to wait for that scene to play out.
BTW, a classic book on manias is Charles Mackay's "Extraordinary Popular Delusions and the Madness of Crowds."
Originally posted by zeeblebotIt never fails to amuse me that the concept of peak-oil was initiated by a Shell employee and that it directly led to a price increase.
http://en.wikipedia.org/wiki/Peak_oil
Now, Mr. Hubbard (or whatever his name was) may have been right and he may have been wrong. However, the mere fact that he worked for a company which benefited financially from his prediction does seem a bit... dubious... to say the least.
Originally posted by eamon oWow, I couldn't disagree with you more. Yeah, there are a few scumbags that have to be avoided. But there are also some very trustworthy people both running companies and investing in companies. It's up to the potential investor to do enough homework (or pay someone to do the homework) to be able to differentiate between the good guys and the bad guys. And it doesn't take that much effort to do that.
trust no-one, always follow your instinct unless it tells you to invest in the stock market, its obvoius that the market is full of sharks.
the government doesnt regulate it properly so its not worth getting involved with. business suffers if people dont invest ðŸ˜
At least in the U.S., although government regulation of the stock markets isn't perfect, I think that for the most part the regulation is very good. Financial disclosure of public companies is MUCH better than it was 50 or 80 years ago.
Now, if you do stupid things like invest in penny stocks without doing a massive amount of research, then you're very likely to get your head handed to you on a platter. But if you stick with reputable people, things are likely to turn out very well. Also, although emerging markets have been doing well lately, I think they carry too much risk, so I avoid the emerging markets.
The key to surviving in the markets is to do your homework, find the reputable people, avoid the manias, and stick with value. There are almost always pockets of value somewhere in the markets, so you can almost always find something to hold.
What amazes me about the recent tech stock bubble is that it was a massive bifurcated market. On one hand, there were all these tech stocks with sky-high P/E ratios (or no earnings at all). And on the other hand, there were a huge number of established, traditional companies that nobody wanted. Many of these traditional companies were so unloved that they were screaming bargains. Many people who were able to identify value were able to make good money from 1998 to 2004, while the people who allowed themselves to be sucked into the tech stock craze suffered massive losses during this same time frame.