Dark Side of Stock Market | How Stock Market Manipulation works?

Dark Side of Stock Market | How Stock Market Manipulation works?
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  fresh perspective.

Hello, friends!  Stock Market Manipulation.  Insider Trading.  How do some people exploit the stock market?  What are the adverse effects of the stock market on a person and on society at large?  These are things that people rarely talk about.  But these are very common.  That’s why in today’s video on Finance,  come, let’s see the dark side of the stock market.  Don’t get me wrong.  Many of you might invest in the stock market,  I do it too,  so I’m not saying that the concept of the stock market is wrong,  but the things that I’ll show you in this video,  will force you to think from a fresh perspective.  And you’d be able to make better decisions  when you invest your money in the stock market next time. 

Sensex has climbed the

Come, let’s see.  “Nifty is opening 70 points higher today.”  “Today, we have hit a new all-time high.”  “The Sensex has hit the 50,000 mark.”  “The market’s in fine fettle as we speak.”  “Sensex has climbed the 60,000 peak. It’s highest ever.”  “But are you, like me, wondering  how is the stock market constantly soaring,  when the economy is actually going down?”  “So this is fickle money.  This is money that can go out once again.”  What is the need to have a stock market?  Why do stock markets exist?  What would happen if stock markets ceased to exist?  There is a simple reason for it.  Large companies need huge amounts of money for big projects. 

share in the company’s ownership

An amount of money that no individual owns singlehandedly.   So, through the stock market,  people can invest their money in the companies,  so that the companies get the funding for major projects  and for new innovations.  And in exchange for that, people get a share in the company’s ownership.  It means that when the company earns good profit in the future,  you can get a part of it too.  But if the company incurs a loss,  you have to bear the risk.  This is the basic funda behind the workings of the stock market.  But if you look at the stock market from the perspective of a common individual,  a common investor looking to invest in the stock market,  Suppose, you are an investor that wants to invest in the stock market.  And you have the option of hundreds of companies.

  This would give encouragement to  the company  to treat their employees worse.  Or to pay them little.  Similarly, if a company is harming the environment,  suppose it uses harmful chemicals to produce its products  because it is cost-effective to do so,  enabling the company to gain more profit.  Or they release their chemical exhaust into our rivers.  Dump’ Scheme.  First, pump the stock price into rising,  and because you own a major portion of the stock,  sell it off later.  Dump it and then its stock price would go down crashing.  Do you know what’s interesting?  The same thing can be done in reverse as well.  Basically, you can bet on a company performing terribly in the future. 

earn profits from it. 

In such cases, you can buy Shorts,  if you think that a company is going to perform badly in the future,  and if this actually happens,  you can earn profits off of it.  But imagine this,  as I told you, Pump and Dump schemes are practised,  similarly, if you get a Troll army,   or use paid media systematically  to malign a company,  to a level that the investors lose their trust in the company,  and its stock price crashes,  if you had invested in Shorts,  then you could earn profits from it.  This is known as Short and Distort.  Basically, it is the opposite of Pump and Dump.  And in a country like India,  where rumours and fake news on WhatsApp spread like wildfire,  you can imagine how easy it is to do so.  I’ll give you a real-life example of this as well. 

Corporate Governance issues

In September 2018,  the price of Infibeam Avenues’ shares fell 73%  when rumours were spread over WhatsApp  about Corporate Governance issues in this company.   Investor wealth of ₹92 billion,  was wiped in one day.  When the price of the share came crashing down.  This wasn’t an indicator of the performance of the company.  But it did happen.  Why?  Because it is so easy to spread rumours  and people work as herd mentality in the stock market.  Pump and Dump and Short and Distort,  are different from Insider Trading.  Because the criminal in Insider Trading  is an insider or someone that knows an insider.  They knowingly exploit price-sensitive information.

  To leak insider information to outsiders. 

But in these cases,  in these cases, it is the collective public  that acts like a herd  and they think that they have an insider information   when they see any false rumour over WhatsApp,  or come across any rumours in the news  and based on it, they take an action.  And overall, friends, there are so many ways to manipulate the aspects of the stock market  that it would take a 10-hour long video  if I start listing down all the ways.  For example, moles can be planted in a company.  To leak insider information to outsiders.  Media houses can be paid to defame a company.

  cryptocurrency or in the stock market

Despite all these,  I wouldn’t tell you to give up investing in the stock market.  It’s not so.  I invest in it.  It’s only that you should keep these things in mind.  You need to be conscious about these things  and you should know that these do happen.  And how you can avoid them.  Whether you’re investing in cryptocurrency or in the stock market,  Remember one thing.  Don’t ever take loans to invest.  You should either have the required amount  or a good enough savings balance,  to invest that money.  And if you don’t have it, don’t invest.


major negative aspect

Because while investing in the stock market or cryptocurrencies,  this is the last and a major negative aspect.  Apart from this, the points that I told you,  keep them in mind while investing.  I hope you found today’s video to be informative.  If you liked it, comment below.  On which other finance-related topics would you like a video?  Let’s meet in the next video.  Thank you very much.  


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