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Message: Re: Shares Comment

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Hi Stock Shark1, I'm sorry that it's taken me a while to answer your post, I have been swamped with work. Are you from England? I grew up in Cornwall, so just wondered where you were from.

I don't really have experience in the markets, I just worked for my husband, who owned his own money management company, and I learned how things worked a little bit, from experiences he had with market makers and brokers.

I think a whole book could be written on the subject of how market makers manipulate share prices. They are in buisness to make as much money as possible for themselves, and if they can short a stock, pressure it down for a few days, and then cover, they jump at the chance.

As I understand it, when an event happens that causes a sudden high demand for stock to trade, and the market makers do not have enough "house ownership" to meet the demand, they have two choices - stand back and allow the stock to run up on what's available in the marketplace (which is what we were expecting), or they can short stock to use to trade with. This stock does not belong to clients or institutions, (it's sort of like QE - they don't really print the money) they don't actually own the shares, but are allowed to "manufacture" them, to keep an orderly market, when the stock has too small of a float, and demand outpaces the supply. They are legally allowed to do this for several days to "retain the integretary of the market place", before they have to actually buy the stock to cover their shorts. In our case they shorted just below $4 and are covering around $2., making a lot of money all the way down.

One market maker couldn't do this on his own, several had to get together--collude--by not allowing the stock to break out above $4, which is the illigal part of all this - the collusion between the market makers. You can see from the chart how it was pounded down from $4, to overcome any more buy interest, distroying confidence in the stock, making buyers think something was wrong, and distressed selling was going on (the chart looks like a pump and dump over Thursday afternoon and Friday morning).

I think it will take considerable effort to overcome this sharp set back.

Nevertheless, this is such an amazing story, and I believe the truth will out. You can't keep a good man down, and Frank will have a great road trip to get the word out, very soon, we hope.


mdb
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jst
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