Who controls the market

The established bodies who make millions everyday have a vested interest in convincing us of two things. Firstly that the markets are fair, simply reflecting the undeniable laws of supply and demand, and that secondly, over time, all markets tend to rise. In direct opposition to this you may have come across individuals who appear paranoid, claiming that ‘the markets are rigged by the big boys’ or even that ‘the market itself is out to get me!’. Such outbursts should be taken with a pinch of salt. Even the biggest banks in the world can only maintain a tenuous grip on something as large and powerful as a stock market. The fact that since 2000, ALL the major banks have been wildly off in their predictions for where the markets will end the year indicates that they have no better idea of where it is going than you or I.In fact, in 2002, the BEST any major bank could do was to be about 40% off the actual year end prices. Not particularly tight contol, is it?

As for markets always rising over time, the answer is a guarded ‘yes’. The general rise in markets seems to be a reflection of the increase in human economic activity, and over the last few hundred years, that economic activity has increased exponentially. As world economies boom and bust, stock markets go with them. The relationship, of course is not as simple as this, but nevertheless, there are good arguments for saying that over time, markets tend to rise. From a day trading perspective, whether a stock market rises or falls is irrelevant, as we trade both long and short.