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The Alchemist (05/16/2007)
By Al Thomas
Jim Cramer, pickpocket

I love Jim Cramer.

Here is a man who knows his business and how to use the tools of his trade. He made his fortune (and my guess he has been smart enough to keep it) using those tools.

He is not alone as all the good hedge fund managers know (or should know) them and are using them today. Don't blame him because he is better than the others.

If anyone is a stay-at-home day trader they do not have the ability to do any of the things that the powerful money managers can. They are at the mercy of market manipulation. The day trader walks up to the plate with 2 1?2 strikes on him and the ball is already half way there. It is strike three before he has had a chance to swing.

In a recent interview on www.youtube.com Jim let loose with a few of the inside tricks he used when he was a fund manager. It is a hard ball game. All the pros use technical analysis such as volume, chart formations, MACDs, stochastics, etc. because fundamentals mean nothing. Those are standard.

Manipulation comes in false-feeding the media with information that can short term move the market in any direction either up or down. When a fund has millions of dollars to buy or sell options it can influence a stock's price is one of many tricks.

Fund managers like Jim, and there are hundreds of them, are moving stock and option prices every day. They are literally picking each others pockets. The most skillful win. The little guy at home with his less-than-$100,000 account hasn't a chance. He is what is known as a mushroom.

Mushroom? Yes, something grown in the dark and fed horse manure.

It is unfortunate that most of the regulators at the SEC, CFTC and NFA also fall into this category because they have never been traders. I attest to this because I was an exchange member and floor trader.

For years I have been criticizing the regulators for not protecting the little guy. I don't care about hedge fund investors. They have enough money and should know better. They can afford to buy good advice, but greed usually blinds them. There are good hedge funds and there are good mutual funds, but unfortunately there are more poor ones in both categories than good ones.

The regulators should be doing more to help the "little guy". About 80% of the 401Ks have less than $50,000 deposited in standard mutual funds. As a bench mark they compare themselves with the S&P500 and most can't beat this average. During a bear market the regulators will not allow the funds to hold large cash or bond positions to keep from losing customers' money. Fund managers are paid on how much money is in the fund and not on how much they make for the investor. Terrible.

Jim proves by his statements that it is foolish to be a day trader. The long term facts prove it is foolish to be Buy and Holder.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved



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