I generally ignore conspiracy theories. The more you know about history, probability, and human nature, the harder it is to seriously attribute malicious intent to things that happen by random chance, or as a result of public and well-known systems. The assassination of John F. Kennedy was (probably) a legitimate conspiracy. The claim that Kentucky Fried Chicken contains an ingredient designed to make black men impotent almost certainly isn’t.

Likewise, just about anything the stock market does can be explained by equal helpings of greed and fear, with the occasional dash of actual information about what a company is doing thrown in for flavor.

Just about anything.

Scott Adams recently made a case for an actual financial conspiracy (possibly tongue-in-cheek, his seriousness is rarely a given). Not a traditional conspiracy, in the sense of secret meetings and such, but a conspiracy of big investors manipulating the market to shake money out of smaller ones, with no more communication between them than a wink and a nod.

As with most conspiracy theories, its main attraction is that it can be made to fit the facts with minimal twisting, and that it “explains” an event that’s otherwise inexplicable by attributing it to the popularly-believed proclivities of a hated minority group (people with a lot of money). And as with most conspiracy theories, there’s a glaringly obvious logical hole in it, namely that the stock market is so big that it would be all but impossible to manipulate on any large scale, no matter who you are or what wealth you control. Even major governments, with the ability to print as much money as they want, gave up trying long ago.

Of course, if big investors could do such a thing, legally or not, you can bet your last dollar that they would. And it very likely would be your last dollar too, because they’d use that trick to make every dime ever invested in the market theirs.

And that’s exactly why I don’t believe it. It would require a real conspiracy, a huge one with secret meetings and all, to prevent that sort of thing from becoming extremely obvious, and nothing can stay secret when it gets that big. It couldn’t fifty years ago, and with the anonymity and easy accessibility of the Internet, it would be harder today by orders of magnitude.

No, this is another conspiracy theory that’s easily explained away by facts. Big investors are doing well in the market for the same reason they got to be big investors in the first place: they make it their life’s work to understand it better than small investors, and they can make money in any market so long as there’s price movement. The price fluctuations themselves are simply caused by the natural give and take of the greed/fear dynamic, with prices dropping as people panic about a particular company’s future, and rising as others snap up the now-discounted stock as a bargain. Sorry to have to burst your bubble, Scott.

(On the other hand, his final recommendation to buy stocks in broad market indexes and “hold them forever” is fairly sound advice for the average small investor, conspiracy or no.)