The Composite Man

An introductory letter from your favorite market manipulator

To Whom It May Concern,

Greetings! Let me introduce myself: I am the Composite Man. Or at least that’s how everybody calls me. But my name matters not. It’s what I do that defines who I am. Most people think I work at an office on Wall Street managing billions in a dark smoky backroom with oak desks and green Emeralite banker lamps somewhere within the premises of the New York Stock Exchange. Perhaps you believe I’m strolling along the trading floor in my fancy frock coat, black tie and carefully trimmed mustache and combed hair. Passing traders call me Wood, Morgan, Bogdanov. They’ve even called me an evil manipulator, a devious genius operating behind the scenes, doing shady transactions when nobody looks. To top it all off, the latest thing I heard about me was that I was a computer, an algorithm, a robot, a mere piece of silicon flipping around ones and zeroes. But I can tell you, ladies and gentlemen, that none of this is correct. I can’t say to you who I am, for I am everyone and I am no one. But what I can tell you is what I do, what I know, and where you can find me. Let me explain.

First, it is true that I manage large sums of money. I trade in the markets with billions under management. That is the nature of my work. It is sometimes my own capital, sometimes it’s the money of clients who want to preserve their wealth. Yes, it is not enough to hoard cash, for that kind of paper is melting away like ice cubes on a hot summer’s day in the scorching sun. The rich know this. They know money is a scam. This might be painful to accept, but it’s the truth. You can take my word for it. The affluent I don’t need to tell. They have accepted this painful reality. It is why they are rich. But please don’t demonize my clientele, they are not responsible for this debasement. Oh no! They’re merely getting out of harm’s way, exiting the depreciating dollar, saving their worth in other assets. Assets I purchase for them when they come to me for help: stocks, bonds, bitcoin, real estate — the usual. Unlike the poor unfortunately, who don’t know how it works. That’s why they’re poor. In my vocabulary poor doesn’t mean no money, it means no knowledge of money.

Anyhow, I accumulate assets when they’re cheap and sell them when they’re dear. You might think this is a fairly easy task once a prospective stock has been identified. But it really isn’t.

Let’s take Amazon stock for example, ticker AMZN. The amount of capital I need to deploy is enormous, and when I enter the market my actions move the price significantly. If I’m not careful I blow up the spreads and run up the price before I am completely positioned. I have to buy as cheaply as possible, paint the charts carefully, make it look very scary for the retail investor. When they think the stock is getting bullish I slam it down and even short the market for a while. I can’t let them think I’m accumulating, for they would not sell to me. If I push the price down far enough, the weak retail hands finally panic sell their Amazon shares and I’m there to scoop it all up at a discount. After a while, the weak hands are all shaken out. At that moment in time only the strong holders are left in the market, the lettuce hands are out, and I can’t keep the stock suppressed anymore. I cover my shorts and the bull runs.

Conversely, when the market is at its top, I feel bearish and it’s time to sell. But I can’t just simply liquidate my big line by dumping it all at once. If I would, the price would tank and most shares I’d be selling at a discount through my own actions. No. Instead I distribute my shares quietly, slowly, stealthily. Time is what I need. While getting rid of my line, I simultaneously long the stock when it dips too low in order to support it and keep traders from panicking. In this way, the inexperienced speculator thinks the bull market is still on and hence buys more stock, giving me exit liquidity. Call me a manipulator, but this is the only way I can operate in the markets.

Where can you find me? I’m in the charts. I have no office, no face, no social security number. There’s a special group of people that knows what I’m doing. They’re the tape readers, the pattern chartists, the technical analysts. Considered by some as the voodoo practitioners of trading, relegated to the ranks of fortune tellers and astrologers of stock speculation. But they understand information asymmetry better than anyone else and they are smart to read me. They are the remoras that follow the shark. And I have much to tell them because I can smell blood from miles away.

Jesse Livermore was an excellent tape reader in the early 1900s and he knew me pretty well. He listened to what I had to say. One day in 1906 he glanced at the chart of Union Pacific, the railroad business, and tape gave him the extreme urge to sell. Jesse couldn’t explain why he was selling the stock, but he had to sell for he trusted his own judgment — he trusted my judgment. For the next few days he had to endure incessant mocking from his fellow traders for shorting UP. But Jesse stayed convicted on his trade. To be frank, he sold as much as he could to satisfy his hunch about the situation with the railroad company. The next day, on April 18 in 1906, he got word of the biggest earthquake ever to hit San Francisco. Though Union Pacific didn’t sell off that very day, it would become clear over the next week that the company had suffered massive damages and it was not long after the stock plummeted like a brick. Jesse Livermore made a killing.

In the aftermath of the Great Financial Crisis of 2009 the authorities said that nobody could have seen the housing credit collapse coming. It was all a big surprise. Well…if you don’t know me or don’t know what money is, then I bet you believe that nonsense. But the smart money saw the collapse coming years in advance. I was stealthily acquiring large positions in gold since the dot-com bubble. Also, I had accumulated my fair share of credit default swaps in 2007 just a year before the banking system would go down in flames. One peek at any of these charts would have informed you of what what was about to happen.

The same thing happened in 2020 just after the Federal Reserve announced they were cutting interest rates and backstopping the financial system with trillions of freshly ‘printed’ dollars in response to the covid lockdowns. They claimed this wouldn’t have any adverse effects on inflation. But I was looking ahead and I understood that prices are proportional to the amount of currency sloshing around in the economy. So I bought every asset I could get my hands on — Apple, Amazon, Google, Tesla, Bitcoin, gold, silver, you name it. The markets were soaring and green candlesticks appeared on the charts as cash became trash. I got out of all my dollars as fast as I could. A year later the Fed crawled back on their former statements. Chairman Powell said he had indeed run into ‘some’ inflationary headwinds. When he announced rate hikes in November of 2021 to combat the rising food prices, I became bearish. This was my cue to unload all my positions. Smart remora traders that read the tape got out with me as well. That was the top of the bull market.

I’m in the charts. Always. Do you think Steve Jobs or anyone else working at Apple in 2006 wasn’t tempted to tell a friend or acquaintance about their little secret project? Surely, some people should have heard about it, don’t you think? If you were in the know, buying Apple stock would probably have been a very profitable decision. Employees and CEOs always have the best information. Compared to the rest of the market, they seem to have a prophetic ability. Insider buying is not illegal, and as long as insiders file their trades with the Securities and Exchange Commission it’s all hunky-dory. Hence, Apple appreciated in price way before Jobs had officially unveiled the iPhone at the MacWorld convention on January 9, 2007. The phone was, to an extent, priced in. And its reveal, previously painted on the plot.

So, who am I? I’m the one who knows. I am information-asymmetry itself. I am the one shaking your hand when you’ve panic-sold the bottom or FOMOed in at the top. I am the emergent phenomenon that whipsaws you around in a red and green sea of candlesticks. I am the one that leaves my fingerprints behind. I am the aggregate actions of all the smart money in the world.

Yesterday I was Cathie Wood, today I am Jamie Dimon, tomorrow I will be Elon Musk’s brother.

Pleased to meet you,

C.M.