Plunge Protection Team

The President's Working Group on Financial Markets as established by an executive order, is one reason why it is best to sell off your stocks instead of waiting around for their long-term profits, as promised to by the market. You need faith and good luck to hit profits with stock, and it is no more certain that you will win big on the stock market than if you go to the casino. The assumption here is that you really have no idea what is going on in the stock market because you do not have access all the information to KNOW.

Consider this article about the plunge protection team:

These quiet meetings of the Working Group are the financial world's equivalent of the war room. The officials gather regularly to discuss options and review crisis scenarios because they know that the government's reaction to a crumbling stock market would have a critical impact on investor confidence around the world.

In the event of a financial crisis, each federal agency with a seat at the table of the Working Group has a confidential plan. At the SEC, for example, the plan is called the "red book" because of the color of its cover. It is officially known as the Executive Directory for Market Contingencies. The major U.S. stock markets have copies of the commission's plan as well as the CFTC's.

The following point mentioned by the article is the MOST important one:

Gathering accurate information would be the first order of business for federal regulators.

Like the know yourself principle, this works the same way! Although it is not up to you, the individual investor to be able to have the same capabilties as this team to gather information on the market's condition.

"Intelligence gathering is critical," Corrigan said. "It depends on the willingness of major market participants to volunteer problems when they see them and to respond honestly to central bank questions."

The SEC, CFTC and Treasury have market surveillance units. They monitor not only the overall markets, but also the cash positions of all the major stock and commodity brokerages and large traders.

The regulators also are hooked into the "hoot-and-holler" system used to notify participants in all financial markets of trading halts. The hoot-and-holler system alerts traders and regulators when a halt is coming.

Relying on Quick Action

In the event of a sharp market decline, the SEC and CFTC would be in constant contact with brokerage and commodity firms to spot early signs of financial failure. If they concluded that a firm was going down, they would try to move customer positions from that firm to solvent institutions.

So, if you are in debt, get rid of stocks. Even if you are not in debt, and have money to invest, it is perhaps best if you save it for the casino, unless you are willing to sit down and know and understand the situation of each and every company you are considering investing in.