Dilbert creator Scott Adams, best known for churning out decades of wall-calendar-ready workplace humor and an unusual endorsement of Mitt Romney, is apparently trying on a second career as a stock-market analyst.
I am happy to report that Adams is not much worse than most stock-market analysts. By which I mean his analysis is dangerous lunacy that should be ignored at all costs.
In a blog post entitled "Here Come The Market Manipulators," Adams unpacks a theory that the entire stock market is being manipulated by a few wealthy, mysterious operators. And he warns that these manipulators, having driven the Dow Jones Industrial Average nearly back to its all-time high, are just about to pull the plug:
My prediction is that there will be a correction of 20% or more sometime in 2013. That will be followed by a jerky climb for the next several months back to wherever the stock was before the fall.
Well, hey, that doesn't sound so bad. That's not any crazier than what some other analysts have warned recently, in light of a possibly over-inflated stock market. What is Adams's bear-market thesis? Too much austerity? European debt crisis flaring up again? Federal Reserve raising interest rates? Actually:
My prediction is based on the observation that the stock market appears to move as if it is manipulated by a network of big players. They lure in the excitable small investors by allowing the market to show a year or two of solid gains then they sell their shares, spook the world with predictions of doom, and buy back into the market at the lower prices.
As near as Adams can tell, these manipulators have some kind of mind meld that lets them know exactly when to buy and sell stocks, en masse. They don't even need those rat-telepathy implants!:
When I say there is manipulation and collusion in the financial markets, it doesn't mean there are actual meetings in which billionaires smoke cigars, drink expensive cognac, and make their evil plans. It might be enough that they are all so aware of each other's moves that they just play follow-the-leader and do so faster than small investors. The sort of market manipulation I'm describing only requires one billionaire leader who is closely watched by the other billionaires. When he sells, they sell, and they all understand why.
Most nefariously, these manipulators have the perfect cover for their manipulation: "The way the big players cover their collusion is by synchronizing their sudden exit from the market with bad financial news," Adams writes.
And to think all this time market-watchers have toiled under the impression that whenever a Lehman Brothers goes belly-up or the economy falls into recession, the stock market sells off because investors are worried about what such developments will do to corporate profits. Instead, it has emerged, these stories are just signals for a secretive cabal of wealthy people to sell all of their stocks at once, and then buy them back again at lower prices.
It just makes too much sense.
Still skeptical about Adams's theory? Think it lacks a certain, how do you say, logic? Perhaps you have doubted Adams's judgment ever since his half-baked endorsement of one Willard M. Romney for the presidency, which Adams based on his anger over President Obama's tough stance on medical marijuana. It just so happened that Romney also opposed medical marijuana, but Adams reasoned that because Romney -- last seen stocking up on Honey Nut Cheerios like some kind of pothead -- was an untrustworthy "chameleon," one should vote for him and hope for the best. Maybe you think Adams is once again pulling something from the vicinity of his ass and holding it up for the world to view.
Adams feels you:
Normally I wouldn't buy into a conspiracy theory that has no smoking gun type of evidence.
What a relief. We would also nitpickingly add that there is not any other kind of evidence here, either. But please, do go on, Scott Adams:
But financial markets are a unique situation. When you give people in that industry the motive, the opportunity, and a near-zero chance of getting caught, how can you expect them to play fair? The bigger shock to me would be to learn that the markets are free of manipulation.
Actually, Adams is right about at least one thing: Markets are not free of manipulation, not by a long shot. But the kind of manipulation that truly exists happens on a much smaller, greasier scale -- high-speed trading robots churning trades in microseconds, insider trading in individual stocks, that sort of thing. And then there's the arguably manipulative work of the Fed, which is pumping cash into the economy to push investors into riskier assets like stocks.
There is just enough of that sort of manipulation going on to make conspiracy theories like Adams's pretty common, actually, and even kind of appealing. I admit that I, too, have made more than one joke about the "Plunge Protection Team" buying stocks when things get rough.
But you permanently revoke your passport to Reality when you start proposing that the world's smartest, wealthiest investors are telepathically moving in lock-step to separate the hoopleheads from their gold. And the hoopleheads have proven stubbornly resistant to the lures of the Illuminati anyway: Despite stock prices more than doubling over the past four years, one of the best bull markets since World War II, retail investors have been unusually slow to tiptoe back into stocks.
But, what the heck, let's stipulate for the sake of argument that Adams is completely right. Even in that case, there's an incredibly easy way to defeat this Bilderberg Group of finance. And I am not even going to charge you money for this earth-shatteringly important market strategy:
Simply do not sell your stocks when there is bad news. In the end you will be just as wealthy as the market manipulators. You're welcome.