Rocket, I was interested to read your comments re market manipulation and wonder whether the "manipulators" may be outsmarting themselves. I have plugged in some numbers using your hypothetical situation and come up with the following scenario:
Current situation
Current holdings in two accounts:
50,000 shares bought @40c = $20,000
50,000 shares bought @30c = $15,000
Total 100,000 shares @ $35,000 cost, value @30c (falling market) = $30,000 A. Manipulation model
Manipulator then sells 50,000 shares to himself @25c.
He still has 100,000 shares but they are worth only 25c, so the value of his holding is $25,000
He then "accumulates" a further 50,000 shares @25c at a cost of $12,500
So now he has 150,000 shares which cost $47,500 and are worth $37,500. B. Market model
However, if he was not active in manipulating the market downwards....
He would retain his 100,000 shares which cost $35,000 and are worth 30c each or a total of $30,000
He then buys a further 50,000 shares @30c for $15,000.
So now he has 150,000 shares which cost $50,000 and are worth $45,000.
He's got the same number of shares as the "manipulator", it's cost him $2,500 more, but the value of his holdings is worth $7,500 more.
Not sure what type of investor you are, but I think most of us would prefer the "market" model in this scenario.
I know this is a simplistic example, and I understand that the figures can be "manipulated" but at least in this one scenario (and I'm sure there would be many more), then the manipulator has outsmarted himself.
CDY Price at posting:
24.0¢ Sentiment: Hold Disclosure: Held
