- I just had a lateral leap in a discipline I hate: economics.
I now understand formalized public trading.
- Individual investors cannot make money in the 'market'
because public markets don't create wealth - they spread risk from corporations
to individuals. That's the only reason equity markets exist. 'Specialty'
markets - commodities, metals, hedges...all do the same thing at the level
of the individual investor. Individual investors are not going to take
delivery of 40,000 pounds of pork bellies. The market in them was made
to provide meat packers with risk management by putting the risk on the
public. ALL markets exist to manage risk for companies and lay it on individual
investors. The dividends companies pay for is insurance money to keep
people buying - and they leverage their own stock against the investor.
There is no one else to leverage it against. Everyone know this so far...
- The game is rigged. It's not supposed to be, but it
can't work any other way. How is it rigged? Basically through the use
of OTC derivatives - which are not reported and not regulated. Would you
like to know what kind of money we are talking about in OTC derivatives?
Easily 200 TRILLION dollars at any given moment and it could be a lot
more - because they aren't reported. That number is not a typo.
- And THAT is why Goldman Sachs is TBTF but millions of
American homeowners aren't. That twelve TRILLION dollars everyone is worried
about just covered a few crappy credit defaults - it didn't save the economy.
It didn't create jobs. It paid BP (which didn't lose a penny destroying
the Gulf of Mexico)...it saved the wealthy people who own the government...and,
in fact, it saved the government itself for a couple of years. But that
won't last. The government will fall with the economy.
- The 'market' lets individuals gamble with their earned
income. Since wealth cannot be created but merely traded by consumers,
the best anyone can ever do is take another individual's money or lose
theirs to someone else. "But wait! You say! I have made a lot of
money in the stock market!" No, you haven't. Stock prices go up
because more and more investors compete for the opportunity to suck up
corporate risk. But you can't win because the dealer has 200 TRILLION
dollars in play hedging your 50 thousand or 50 million. What looks like
profit to you is nothing. It's only there to tempt you to keep playing.
And the great Monopoly wheels keep rolling.
- So you have a hundred ounces of gold bullion, do you?
OK. You paid $300 an ounce and it's worth $1,600. You made $130,000.
Or did you? If the economy tanks, you didn't. If inflation goes wild,
you didn't. If gasoline is $10 a gallon, you didn't. If there is no one
to sell it to, you didn't. But let's say you made that 130k. What's the
tax? What's the brokerage fee in and out? What's left....$80k?
- What are you going to do with it? You can buy the $80k
house you could have bought for $30k back in 2002 - the last time gold
was $300 an ounce. Well, not quite. But if you had, and had rented it,
you would still own it - AND the gold. Because you would have grabbed
someone else's earning stream.
- No matter what you do with that dough - unless you launder
it - you won't have made anything - and that's the plan - no one can beat
the actuarial tables.
- Get out of formal markets. Wall street doesn't need
your money - your ohana does if they are going to survive. Invest in simple
solutions which cannot fail. Do it now - there is a learning curve and
I am already obligated to my tribe.