I don’t normally read Charles E. Kirk but I do have The Kirk Report in my RSS feed reader, so once in a while, I might come across something in which I find myself very interested.
Today, Charles mentioned an article he wrote more than a year and a half ago called Walking a Stock Up. In the article, he described the method unscrupulous market pundits and fund managers manipulate the market for their own benefit. His post explains quite clearly why when certain stocks or markets are getting a lot of hype, it’s the perfect time to get out.
Basically, fund managers buy a stock at a good value for their personal account. Later they buy the account for their clients through the mutual funds they manage and begin touting the benefits of the stock to the public. Now that the price has gone up, selling in the private account will occur first, followed by dumping from the mutual fund.
The investing public was pitched a stock doomed to fail.
Updated February 6, 2012 and originally published August 23, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.