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Richard Ney and the Rigged Stock Market

Regarding my post yesterday in which I wrote that the stock market is “rigged,” and that I wouldn’t touch it with a ten-foot pole, I have previously linked to a post by David Kramer which included an article by Michael Templain on Richard Ney’s assertion that the stock market is rigged. According to the Wikipedia entry on Richard Ney, Ney wrote three books attempting to expose the manipulation by stock market “specialists” to, as Templain put it, “fatten upon the innocence and ignorance of the small investor.” The three books are The Wall Street Jungle from 1970, The Wall Street Gang, 1974, and Making It in the Market, 1975. While those books no longer seemed to be available just a few years ago, they do seem to be available now. That’s probably because more and more people are catching on to the scam that Wall Street is.

In the post by David Kramer, Templain quotes from Richard Ney’s book The Wall Street Gang:

Studying the transactions in each stock, I became immediately conscious that, on too many occasion to be a coincidence, a stock would advance from its morning low and then, often during the afternoon, would show an up-tick of a half-point or more on a large block of anywhere from 1,500 to 5,000 or more shares. This transaction seemed to herald a transformation in what was taking place, for immediately thereafter the stock would begin to drop like Newton’s apple. Before I could find out what caused this, another question presented itself: What caused the same thing to happen at the low point in that stock’s decline? For it was also apparent that a block of stock of the same size often appeared on a down-tick of a half-point or more, after which the stock quickly rallied. Together these two facts seemed to give a stock’s pattern continuity. At the end of several days of investigation, I discovered that these transactions at the top and bottom of a stock’s price pattern were for the specialist’s own account. … Clod that I was, I had at last recognized that, although the study of human nature may not be fashionable among economists, it is never out of season.

Also in that article, the revolving door of Wall Street and FedGov is mentioned. There is a reason why people now jokingly refer to “Government Sachs,” although it is no joke. Incidentally, here is a more recent article on the insider trading going on involving former Federal Reserve employees. (I agree with Ron Paul, who says, “End the Fed.” Decentralization and privatization are the true “corrections” that would resolve many of America’s ills.)

Here are two hours out of a four-hour 1970 interview of Richard Ney by Jerry Williams. (From JerryWilliams.org. The other two hours of the interview aren’t available there.) Clicking the link opens a new Media Player window. I have posted these interviews in the past.

http://www.jerrywilliams.org/audio/WBZ/wbz36.m3u

http://www.jerrywilliams.org/audio/WBZ/wbz18.m3u

And finally, from the Kramer post, a quote from Richard Ney’s book, The Wall Street Jungle, “Ney’s Small Investor Trading Recommendations”:

1. Do not buy the acknowledged leader in a field. Buy the number 2 or 3 company. These companies are more likely to be subject to bull raids by the specialists (1Ney, 298).
2. “Nothing puzzles me more than an investor’s willingness to pay more than fifty dollars a share for stocks. Buy low priced stocks. It’s percentages you’re after and you’ll get them in these stocks in a bull market” (1Ney, 298).
3. Invest only in stocks listed on the NYSE.
4. Do not buy secondary offerings from your broker.
5. Buy only stocks whose prices have fallen at least 35 to 50 percent.
6. “The rule, ‘Cut your losses and let your profits ride,’ was invented by a broker” (1Ney, 298).
7. The average investor need not worry about tax brackets, so do not hesitate to sell at a profit. “A short-term gain is better than a long-term loss” (1Ney, 299).
8. Own your stock. Do not use margin.
9. Do not sell short.
10. Do not allow your stock to be borrowed (via a margin account; M.T.)
11. Credit balances should be immediately transferred to your bank.
12. Do not leave your stock with your broker in street name.
13. Invest only in growth oriented, not income, stocks.
14. 4 to 5 stocks in a portfolio is plenty.
15. Make arrangements with your bank to receive your stock.
16. If there has been a major advance from the summer lows, look for the public to begin selling 6 months hence.
17. Big block sales at the end of a run-up (usually marked by heavy volume) marks the imminent decline in price.
18. Look for bull raids in May, up from the April 15th tax low.
19. Never enter stop or limit orders.
20. If you are interested in a stock, learn its specialist’s habits.
21. Stocks that are ideal for bull raids are those that decline as close as possible to an angle of 45 degrees.

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