There is an interesting term in the financial world - "price friction". Its defined as a number of shares you need to buy or sell in order to move stock price by 1 penny. I'm sure you've heard about AIG the former 18th biggest company in the world which is taking the money from generous Uncle Sam's hand and throwing it to thousands of finanacial institutions worldwide. Basically US government is throwing money around the world through AIG to prevent the world from collapsing.
AIG stock is one of the most dangerous ones on the market right now and like I wrote before it is an ideal candidate for manipulation and speculation
So back to Friction Factor. For AIG it is only 2392 shares. It means that it takes buying 2392 shares more than selling to move the price up by one penny. What is the price of 2392 shares ? Its only $33,488 !!! So what does it take to move it up by 20% a day? With current price of 14 dollars, it needs to be moved by 380 cents. 380x2392=908,960. So it takes only 908,960 x $14 = $12,725,440! Sounds like nothing for those people that have the money and the knowledge to play it. So they ride the stock up and down like a child on the teeterboard. To start the manipulation you just need to choose proper news to make it look real. And there are always enough loosers the world to be taken up for a ride. Some loosers are pretty smart people, but they just don't know exactly how stock market operates. Fear is very powerful emotion and so is greed. So when the price is droping you can count that many people will sell, when its going up you can count on many people buying. And so it goes. Market makers making money, while the rest of us loosing.
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