After this episode of ‘The Street’, Cramer was called out for his statements about how hedge funds could manipulate markets. Probably because it was exposing a very dirty secret in the trading world that they didn’t want known by the average investor.
“It’s a fun game”
A lot of times when I was short at my hedge fund and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn't take much money. Similarly, or if I were long and I would want to make things a little bit rosy, I would go in and take a bunch of stocks and make sure that they're higher and maybe commit $5 million in capital to do it and I could affect it. What you're seeing now is maybe it probably is a bigger market. Now, maybe you need $10 million in capital to knock the stuff down. But it's a fun game, and it's a lucrative game, and you can move it up and then fade it. That often creates a very negative feel. So let's say you take a longer-term view intraday, and you say, listen, I'm going to boost the futures, and then when the real sellers come in, real market comes in, they're going to knock it down, and it's going to create a negative view. That's a strategy very worth doing when you're valuing on a day-to-day basis. And I would encourage anyone who's in the hedge fund game to do it because it's legal, and it is a very quick way to make money. And very satisfying.
“that's a very effective way to keep a stock down.”
At about 3:35 Cramer discusses how to lie about Apple to keep the price down.
Another stock that a lot of people are focused on right now seems to be Apple.
Yeah, Apple's very important to spread the rumor that both Verizon and AT&T have decided they don't like the phone. It's a very easy one to do because it's also you want to spread the rumor that it's not going to be ready for Macworld.
And this is very easy because the people who write about Apple want that story. And you can claim that it's credible because you spoke to someone at Apple because Apple isn't in it. Doesn't they're not going to comment they're not going to so it's really an ideal short and I would again if I were a short apple I would be working very hard today to get that and the way you would do that is you pick up the phone you call six trading desk and say listen I just got the phone with my contact at Verizon he has already said listen we're not we're a lucky g house we're Samsung house we we're a Motorola house there's no room for apple they want too much that we're not going to let them in this is not we're not going to let them do what they did to music.
And I think that's a very effective way to keep a stock down.
In case you were wondering, it’s all rigged.
Remember when Jim Cramer Explained How to Manipulate Markets Illegally?