How do big companies manipulate stocks for profit?

Buying a republican usually works.

Do some research on insider trading or how and when corporate executives unload or buy large blocks of stocks in their own cos. You can do the research. I am too busy.

Thanks gailcalled.

I did read some stuff on insider trading. But it’s quite theoretical and I wonder if anyone has actually any anecdotes / is someone who is familiar in the field that can share a little bit about how one plays with people’s expectations to make money

It doesn’t have to be illegal either; just “the way the game is played”...
I’d also like to hear from people who bought stocks and somehow got screwed…

If someone had access to knowledge about a companies upcoming activity that was not publicly available, this could be used to their advantage at the expense of others in order to play the stock market.

Perhaps Google for the Apple, Inc. options back-dating scandal. That’s an interesting — and fairly hairy — topic.

In your example you talk about manipulating a stock, outwit competitors and rake in a huge profit. Price manipulation would not really involve outwitting a competitor and raking in a huge profit could mean earning a profit through ordinary business dealings or by selling stocks at the right time. Which do you want to consider?

As far as “influencing” a stock price goes there are legitimate ways such as having a good quarter, beating the earnings estimates forecast by stock analysts who are following the stock, having the corporation announce a stock buyback plan in which the company would repurchase outstanding shares on the open market, thereby reducing the number of shares outstanding and boosting earnings per share which would generally increase the stock price. But these are all common and legal methods and really not really good subject matter for your story.

The Apple options scandal really did not involve manipulating the stock price, but rather involves how the company priced the stock options available to certain employees with the end result allowing them to purchase shares well below market prices.

Since the passage of Sarbanes-Oxley several years ago the penalties for monkeying with financial results of public companies have become quite severe and manipulating results is more of a gamble for CEO’s or CFO’s because there is the threat of fines and jail time.

I am not sure how this would fit into your plot, but you could do a little research about people who :short” stocks which is essentially betting that a stock price is going to sink. There are occasionally reports in the press about investors squeezing companies to get the stock price to drop and profit from that. A google search on shorting stockos might be productive for you as would a reading of some back issues of the Wall Street Journal or the New York Times.

SRM

http://en.wikipedia.org/wiki/enron

Try making something up. If it sounds believeable people will accept it.

If you have insider information – good or bad, you know what way you can expect the stock to move when the information goes public. Letting people know this information so that they can trade on it before the public is illegal, but gets you ahead of the swing in stock price – buy if it will go up, sell if it will go down. Misinformation will alternatively screw people if they trade on incorrect speculation.

hey thanks guys…
for srmorgan for this detailed answer and respondants in general for givign me jargon + pointers on where to search.