Celebrating Three Decades of Worldwide Stock Market Manipulation

TL;DR

This paper reflects on nearly thirty years of successful stock market manipulation, emphasizing key techniques, market impact understanding, and the societal implications of price distortions for profit and market capitalization growth.

Contribution

It provides a comprehensive historical analysis of market manipulation strategies, their effectiveness, and their influence on global stock market growth over three decades.

Findings

Market impact and decay can be quantitatively understood.

Price manipulation often outweighs footprint concealment in importance.

Widespread trust in prices amplifies manipulation profitability.

Abstract

As the decade turns, we reflect on nearly thirty years of successful manipulation of the world's public equity markets. This reflection highlights a few of the key enabling ingredients and lessons learned along the way. A quantitative understanding of market impact and its decay, which we cover briefly, lets you move long-term market prices to your advantage at acceptable cost. Hiding your footprints turns out to be less important than moving prices in the direction most people want them to move. Widespread (if misplaced) trust of market prices -- buttressed by overestimates of the cost of manipulation and underestimates of the benefits to certain market participants -- makes price manipulation a particularly valuable and profitable tool. Of the many recent stories heralding the dawn of the present golden age of misinformation, the manipulation leading to the remarkable increase in the market capitalization of the world's publicly traded companies over the past three decades is among the best.