Bill Cara

Understanding the Market Forces at Play

December 19, 2024

It saddens me to see investment professionals on the buy side responding superficially to market news. These professionals, with successful careers, should understand that Fed announcements, earnings reports, and breaking news are often just cover stories behind market price movements. The real market manipulators are the entities that inflate the “everything bubble.”

After a long bull phase, these Humongous Bank & Broker (HB&B) organizations begin selling because they can’t push prices any higher. This year, they started selling heavily after the stock market peak on December 4. I predicted that the public would notice this bear trend within a month, with the JP Morgan 4Q earnings report on January 15, 2025, serving as the cover story.

The report will likely reveal little on the surface, but the powerful money organizations on Wall Street will highlight something to rattle investors, and JPM will be blamed. Market prices move due to specific reasons. Price drivers influence every sector, industry, sub-industry, and company stock. People’s collective emotions drive broad market movements up and down. Understanding these forces is essential to linking the dots behind market prices.

HB&B leaders know risk-reward well. When asset ownership risks become excessive, they sell, occasionally causing bubbles to burst. They control market prices using massive algorithmic trading programs (BOTS). These algos operate as long as there is trading activity in the market, pushing trends until sellers outnumber buyers or vice versa.

Basketguy, a participant in the investing discussions at billcara.com, has provided insightful observations about BOTS for several years. He noted that BOTS were probing the market for two days at the open, gathering data from sell stops and buy orders before a massive sell-off on December 18.

This probing of their BOTS reveals how HB&B uses algorithms to control market prices. In addition, the stock exchanges that HB&B controls have breakers in place to halt trading if the market sells off too quickly, but never when it’s rising.

The issue extends beyond daily market index movements or individual stock trades. HB&B manages algos, trades accounts, and uses media to exploit human emotions (fear and greed). They trade against the client and continuously win while the public loses.

HB&B builds positions in bull markets for profit and sells when they’ve pushed prices to the limit. In bear markets, they drive prices lower as the public sells, unilaterally selling out clients’ positions if needed. They never lose to the public because they control the exchanges, the industry members, and all aspects of trading, manipulating both the buy and sell sides directly as well as indirectly through media shills.

HB&B’s influence extends to regulatory practices. Nearly a century ago, they lobbied for laws (the Securities Acts of 1933 and 1934) allowing them to operate legally on both sides of trades. They prioritize their capital over clients’ interests and tell clients that all trading is subject to regulatory approval, overseen by entities they heavily influence, like the SEC and FINRA.

Twenty-five years ago, I challenged these practices in a formal hearing to regulate electronic trading in Canada. I likened financial transactions to a biased legal proceeding in which all the lawyers in a divorce case and the judge were partners in the same firm. But the industry ignored my concerns. The public understands the market is rigged, leading to low participation. Elected officials, often bought by financial interests, do nothing to change this.

A market crash is imminent, and the public will suffer massive losses, leading to forced selling, suicides, and broken marriages. Despite this, HB&B’s primary mission is to protect its system, its capital, and the executives of its leading firms.  The client is far down any HB&B priority list.

Is this a moral issue? Absolutely. The public looks to its banker and broker for trusted guidance to build its own wealth, not wealth for HB&B.

When I established billcara.com in 2004, the byline was “A discussion of capital markets and social equity.” Despite being labeled a “socialist” by Barron’s Magazine for this, I continued to fight against HB&B’s practices.

I urge people to think for themselves and recognize that HB&B is not their friend but the enemy. After multiple retirements, my fight is now in your hands.