The stock market is the center of our economy here in the United States. Through the market, investors fuel their wealth and retirment accounts by purchasing small pieces of companies. The companies selling shares also benefit from the funding provided and more.
Most people that I talk to know what the stock market is, and may even have a retirement account or investment account where they own shares of various companies. However, I’m often surprised by the things that many don’t know about the what could be considered the epicenter of our economy.
Here are 5 facts about the stock market that may prove to be quite shocking:
Fact #1: Market Manipulation Takes Place More Often Than You Think
Long gone are the days of Bernie Madoff, right? Investors are led to believe that regulations put in place by the Securities and Exchange Commission (SEC) and Federal Industry Regulatory Authority (FINRA) protect them from any chance of market manipulation or fraud.
Unfortunately, this is a misconception. The truth of the matter is that while the SEC and FINRA actively work to punish those that break the rules, rules are often still broken.
In fact, here at Alpha Stock News, I report on rumors at least once a month, if not three or four times. If you’ve read these articles, you know that I always say something to the effect of:
Rumors are the most common form of manipulation in the market today. They often prove to be invalid, leading to substantial losses for some investors.
The truth of the matter is that it’s not uncommon for someone to unleash a rumor on message boards and social networks for the purpose of personal gain. In fact, the SEC has even issued a warning to investors about rumors spread through social media!
Bribes are also common practice. Although, these tend to lead to swift punishment by the SEC and United States Department of Justice. In fact, some of the biggest companies in the world have been brought up in indictments for bribery, including global pharmaceutical comapny, Sanofi.
The truth of the matter is that no matter what regulatory authorities do to protect investors, there’s always going to be scum out there. Some will always think that they can get around the rules in one way or another, and in most cases, will get caught in time.
Nonetheless, as an investors, it’s important for you to be aware that fraud and manipulation are still commonplace in the market. This way, you can be on guard and constantly aware of where your money is and how it is being invested.
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