Established March 2004 © Kenneth A. Smith
Sponsored by En Soph Associates.
The money they took home came out of your pocket!
From March 2000 through December 2005 market returns were negligible to negative;
yet Wall Street wheelers
and dealers had a record bonus payout in December 2005. Security firms in
New York gave out $21.5 billion in end-of-year bonuses, according to the state
controller's office (Fortune Magazine, p. 31, February 6, 2005).
You ought to pay attention when firms on Wall Street announce big earnings for
themselves. The money they get comes out of your
pocket. Look at this headline from Reuters:
NEW YORK, Oct 17 (Reuters) - Each and every Wall Street worker took home nearly $300,000
(on average) last year as bonus profits from trading and merger advising (New
York State Comptroller Alan Hevesi).
If you enjoy having these great sums deducted from your potential return on
investment then you need to seek help. You are insane. The logical
alternative might be to take your money away from them and learn the game for
yourself.
Think a minute and total up the losses to investors here.
Thirty-Six Billion Dollars every year goes to Fleece Street traders. We are robbed by trading practices created to manipulate investors.
At the same time, you did not make enough to cover inflation and taxes on profit incurred to your account.
After Fleece Streets takes $36-Billion off the top of our savings and investments the worst is not over. In addition, corporate executives have been siphoning off billions of dollars from corporate treasuries, reducing shareholder returns. Executives seem to believe companies are their private estate.
Now is the time for all public investors to come to their own financial aid. Stop buying stock until you know what you are doing. Stop buying mutual funds too. Stop your IRA and 401-K contributions also - until you know what you are risking and how to protect yourself.
Do not ignore that legally required statement in every investment vehicle:
++There are risks involved with investing, including possible loss of principle++
You can lose every hard-earned nickel you put into an investment.
That statement is not to be taken lightly.
There can be no guarantee that past patterns will be repeated in the future. Only subsequent experience can reveal the secrets of the future (Sprinkel, 1964).
The glorious touts and marketing phrases broadcast from Fleece Street are always qualified at the end with these words:
Past performance is no guarantee of future results.
Of course advertisers and marketeers trust in human psychology, the psychological mind-set of the gambler and speculator in human nature; they trust you will ignore their warning, a warning which protects them from law suits and investigation by regulators.
Other statements are akin, such as:
*Under no circumstances is the research content of this website to be relied upon as constituting personal investment advice.
You see this all the time; believe it or not most investors ignore this warning. They make a grevious error in doing so.
Beware of everything you read about the stock market.
And everything you
see on television about the stock market.
And everything you hear on the
radio about the stock market.
And everything you hear or see as rumors and
tips about the stock market.
They're extraordinary
So better be wary
Because they come in every shape and size, size, size
If honey's what
you covet
You'll find that they love it
Because they'll guzzle up the
thing you prize
Beware, beware, be a very wary bear.
(Winnie the
Pooh by A. A. Milne).
We humans are naturally gullible (Nasim Taleb).
Anybody who plays the stock market not as an insider is like a man buying cows in the moonlight (Daniel Drew).
Don't be tempted to play the stock market. If people knew the risks they'd never invest (Nassim Nicholas Taleb).
To pretend that everyone participating in the financial markets is doing so with the same amount of information is to deceive the general investing public (Christopher Wood).
If investors were on a mission to lose money quickly, the stock market could be an excellent place to do so (Scott S. Fraser, former stockbroker).
World financial plumbing engineers have designed the pipes - and the schematics are hidden from everyone but themselves (Syncreticus).
And you might take notice, for instance, private pension funds in America are under-funded by 400 billion dollars. And public pension funds are under-funded by in excess of one-trillion dollars. Meaning the money is not there What is more, pension funds are heavily invested in and regularly gamble by actively trading their portfolio of stocks. My bet would be you won't find this fact published in the major financial media - no where, but this is a hard fact you should take into consideration when you fantasize about your retirement.
There are agents of deception who want to deter you from finding out the dire circumstances surrounding pension funds in America and England. I have previously linked sources for this information and after my information began to be read by a wider audience the links to pension troubles started to shut down. You may find it difficult, now, to find information about shortages of pension fundings that are widespread.
See #1 Pensions and #2 Pensions and #3 Pensions and #4 Pensions and #5 Pensions and #6 Pensions and #7 Pensions and #8 Pensions and #9 Pensions and #10 Pensions
The last was most recent scandal. State of New Jersey fleeced its own pension plans.
If pension defaults were not enough to deter your retirement fantasies, then consider how you will maintain your health in retirement. Health Care for Retirment Programs which during your employment were guaranteed to be paid by your employer or a government agency, these are almost non-existent because the money was never actually put aside to pay for these benefits. The money is not there to the tune of 300 billion dollars. So the math here is 300 billion plus 400 billion in private retirement funds that are NOT THERE FOR YOU (700 billion). In addition, recall the one trillion public pension short-fall! We are talking BIG MONEY HERE. This is not nickles and dimes. What is more, you may not get the retirement health care you were promised; these systems are BUSTED TOO.
Laurence Kotlikoff, a Boston University
economist has estimated the unfunded liabilities of Americans associated with
healthcare and retirement amount to $80 trillion, over seven times our
annual GDP. (Investment Outlook, Bill Gross - September 2006).
What is more, the United States Government Pension Benefit Guaranty Corporation reports
a deficit in pension fund insurance. (The Economist, November 19th,
2005). The government cannot cover this liability!
Clearly, Fleece Street is beating pension funds to death.
If you are serious about your retirement - then do your own research. Don't stop with my efforts alone.
Those contemplating early retirement will want to know if they have enough to survive possible bear markets such as the one that sent the 1973 retiree back to work after 20 years. What is more, downdrafts in the stock market have a penchant for happening when investors are just then ready to take money out for health needs, emergency needs, and so on.
If you continue to study the material on this site you will learn how you can be cheated by Fleece Street propaganda. And propaganda spewed out by media shills, talking heads, and pretty faces on television screens. Once you learn the basics of this nefarious world I present, you will then be as safe as is possible in a world of financial uncertainty. You were lucky to find this site because there are 4.4 billion web sites on the Internet!
Most likely no other site on the Internet will provide you with the cautions and warnings you find on this site. There is no money in truth telling - so they abstain from truth.
Nothing is being sold here! No pop-up ads. No solicitations. This site will be SEC compliant. There will be no buy/sell recommendations. There will be no company analysis, no fundamental analysis, no technical analysis. This site will not peddle or recommend stock; will not hype futures, options, bonds, or funds. This site will not link you to other sites that do these things. You will not be bamboozled here!
But I will mention iShares. Assets in the iShare AMEX Spyders (SPY) grew 90%, to $6.2 billion, in 2003. The entire ETF category, which is dominated by institutional investors, hedge funds, and investment advisers, grew to more than $300 billion in 2005.
To learn about iShares go to this link:
SPDR
Use Point and Figure methodology to buy and sell your investment. In my
experience this method enables a comprehensive understanding of price movements.
Don't trade/invest against these methodologies once you have
decided to use them. Stay focused. You might diversify
from among Vanguard Viper Funds.
You should be aware that you cannot depend on any government or quasi-government agency to always
protect you from unfair practices if you decide to trade options (Thomas McCafferty).
...investors seek wealth and traders seek income. The former has a long-term perspective,
and the latter a short-term perspective. Since options have a set term or expiration
date, they cannot be considered long-term investments in the same sense.
You cannot hold options for years or even decades, as you can stocks. (Thomas McCafferty).
To learn about the Vanguard Viper series go to this link:
To learn about a 10 billion dollar fund holding small companies go to:
IWMYou will not see daily advisories on market movements posted here. This is not an advisory site, not an analyst site; site is not touting anything. This site only asks that you carefully read the information on this site and refer back to it if you forget what you have read. In order to keep your money from the jaws of alligators and crocodiles you need to pay attention.
To further emphasize, this site is not a brokerage site, is not a fund site, is not a money managing site. What is more, this is not a financial planning site. And this is not a place to dream, wish, fantasize about making money fast. Money is made slowly. Lost fast.
The author and owner of this web site is not an investment advisor. These pages are written as instructional, informational only. You must be responsible for yourself when reading anything said about the stock market.
Do not construe these texts as advisories. No one, no agency, not business, not government, will save you from a mistake you make in the financial world. If you lose you will have lost it forever.
This chapter tells you what books to read: failure to educate
yourself will cost you a fortune. You worked, I assume, for your
money. Reported every day for years, to a work site.
You have been saving money for retirement or to send your children to college.
Take time to learn what you need to learn in order to conserve the
money you have put aside.
Fleece Street will use propaganda to inculcate your mind with notions of easy money to make just by giving it over to them. Don't be fooled. Even if you are a professional who has graduated cum laude, nevertheless, in regards to money and fleecing, the operators on Fleece Street are 4.0+ and emphatically, they are specialized, focused, intense, cunning, and they have big muscles, strength, power - they use all that to exert force on the stock market. That force is against you. Not for you.
The purpose of this list of reading material is so you may learn what you need to know to protect your money.
Common stocks are speculative financial instruments and are not suitable for those concerned above all with conservation of capital.
The common stocks of the highest quality companies have a history of price variability far too great to qualify as low risk in the same sense as money market instruments or savings and loan accounts.
Dividend yields are rarely enough to justify incurring the risk of intentionally entering a market that is expected to remain in a narrow range.
Those who anticipate a falling market and buy stocks which they expect to go up probably are relying more on hope than on wisdom.
Buying so-called defensive stocks that will go down less than the market is hardly calculated to provide returns adequate for the risks incurred (The Stock Market, 7th Edition, by Teweles & Bradley, page 390).
The investment industry creates euphoria and panic. It moves astonishing amounts of cash around the world at startling speed with shocking results. Then it pays itself (not you) fantastic amounts of money (P.J. O'Rourke).
As of 2/4/2006 the 150 stocks listed in the Value Line 600 analysis of stocks rated #1 and #2 had an average yield of .75% - which represents a pejorative assessment of the market on this date. The shocking feature of this calculation is 64 of these stocks returned zero. So the .75% yield is from the few remaining 86 stocks.
You can't call 3/4 of one percent a success story on value. In short, there is no value in these so-called value stocks.
If you think Growth Stocks will give you a better return you are mistaken. If your portfolio held the 100 Growth Stocks promoted by Valueline in October 2006 your return would be less than one-percent (.92% exactly). This is about what the bank pays you for an ordinary savings account - virtually several percent points below inflation - you are losing money in savings, in value stocks, in growth stocks.
The previous paragraph is a strong argument for investing in bonds and CD's rather than stocks. United States Treasury issues are returning yields of 4-5-6% - why take less?
Yes, why take less? Ordinary old-fashioned Certificates
of Deposits (CD's) are returning 4.30% through 5% depending on length of time
you rent out your money.
The Liquidity Approach to Stock Investing, a book I am writing, is in process, a work in progress, will point out, for one thing, that institutions and big players seek the highest return on investment that's possible in a financial environment. Return on Investment is generally abbreviated as ROI. The decision whether to invest in a bond or in a stock is based on ROI. This decision is factored with an analysis of future expectations in regard to monetary changes, the business cycle, and the government's fiscal activity.
You cannot escape inflation and taxes.
Your money is not totally your own.
You don't make money until taxes and inflation are deducted from your gross figure.
When you retire your financial holdings will take a hit from the government.
Whatever you choose, stocks, bonds, CD's, money markets, it makes no difference
to the IRS and the Federal Reserve.
You will be taxed by both; the Fed by inflation.
To repeat, you will be required to pay taxes.
The money you invested will be depreciated by Federal Reserve policies in concert with
deficit spending.
In short, when you withdraw your expected profits you will be taxed exorbitantly and the
money you have left will have lost value equal to the tax which inflation has imposed on
you, by the policies of the Federal Reserve and Congress.
In the final analyis it means you are living with an illusion of profit.
You have been bamboozled by Illusionists.
Reality about stocks and bonds is this:
Taxes and inflation, fees and commissions, funny
games, trading rules that are fixed against you, professional chicanery, and your
own human psychology, which very likely you do not understand, these in
combination will defeat your dreams, very likely, more probably than not.
Roger Lowenstein wrote:
Wall Street's modern financiers have got rich by exploiting their control of the public's money:
their essential trick has been to take in -- and sell out -- the public, at
opportune moments.
The stock market moves in concert, is orchestrated. If you are not in the orchastra, or not leading the symphony, then just listen, don't try to play (Syncreticus)
One Way To Get Scammed
Good title for a book on trading,
that.
I was just thinking about a trader I knew, guy made a good piece of
his income by tutoring and enrolling his students in a program.
He
tutored Fibonacci Projections. And made appearances at major trading
groups, such as Bear Sterns, to explain his system - got paid for these talks
too.
His advisories were emailed to students, each usually with 100k
accounts which would be in a brokerage recommended by the tutor.
What's more, his advisory emails went out regularly to higher level traders who bought into
his method, even to whole trading floors.
So how did the method work for
him?
Since Fibonacci projections are easy to place on a chart the tutor
knew exactly where his followers were going to enter and going to
exit. Surely he was front running these Fibonacci levels; shorting
the higher levels just when he knew all the long money would be placed already;
and going long just prior to his cognizance of Fibonacci
bottoms.
Probably not always right because things can go
wrong. But I bet he made his million this way.
Anyone could
use this scam if he could get a following, all with substantial sums of trading
resources. Between 300 students with 100k each and a trading floor
here and there following his emails his job of trading would be very
safe.
The stocks in the repertoire were easy marks to gun.
So much for trading seminars and tutors; be alert fellows and damsels.
There are several such systems out there, all with propaganda and
marketeering behind them.
And do not labor under the illusion the
Securities and Exchange Commission will do anything about these scam
systems. Such scams are modus operandi and have been for 200 years
at least.
Every week its a sure thing that several brochures will
arrive in my mail box touting software with
utterly unreal claims for riches just by buying
stuff and signing up for an account. Nothing
to it they claim.
There should be federal law, a SEC provision,
that no marketing can be done for these
schemes unless disclaimers are present in
the marketing material. There should be disclosures about taxes and inflation.
The SEC should spend money, advertising about schemes, about fraud, about how we are fooled.
Furthermore, information about the grevious tax situations that
exist for small traders and public investors ought to be included in
any marketing material published by financial outfits, financial advisors; particulary sanctions
ought to be in place for television gurus who tout advice, sell services, persuade an audience.
There I go again, writing about impossible
dreams. Nothing is going to change to aid
the small trader, small investor, the saver, the
little guy who is the main support for oft-pseudo
professional traders.
Dante pointed out that people without substance are so numerous they populate the world.
Many of these are those buying schemes marketed to the public for trading and investing.
The Establishment is the problem, not the solution.
There is no watchdog favoring the public. The dogs are fed by financiers on Wall Street.
Dogs, by nature, obey those who feed them.
12/24/2005 Secrets and Lies, by John Kuhn The old rich get blasted for a variety of reasons, not all without merit. But whatever their faults, they endure, as they've long known the basic secrets in plain sight about the stock market, not only about the long-term upward compounding of the market, but also the huge benefits available with leveraged compounding that redounds from the judicious application of huge chunks of other people's money. When I was about 40 I started to wonder, "If the market mostly always goes up, why aren't there more management companies out there owning stocks and claiming the pleasing increases in clients' portfolios were the result of the intense sweat of their own brows?" And collecting the ever-increasing fees the market mistress hands out with pleasing generosity irrespective, within tolerable limits, of whether one's relative heap had been "naughty or nice." Now that there are more mutual funds than stocks and the hedge fund population is at all time high, what was in my youth a mysterious and seemingly almost private realm is now the province of all. It reminds me of professional golf. We see the names of a handful of top players, and are ignorant of the others in the top 150 beavering away in the sun, making from one to several million a year. In the money management game, there are thousands of me-too companies, nowhere near the top 150, providing tens of thousands of portfolio managers and analysts and support staff with very nice lifestyles despite the well-broadcast reality that investing directly in the S&P is available almost for free and does better than most of the money managers. The market supports so many. I'm most amazed by the crumb feeders: remora getting paid for their variations on the books "Four Market Secrets the Professionals Know," or "Point and Figure for Profit," or the always popular Sagiographic "Make Money the W#rren B#ffet Way," "Prosper by Finding Your Inner W#rren," or "Seven Keys from the Sage."
A word about brokers:
Brokers spend most of their time looking at a model such as Black-Scholes that tells them
what price to buy and sell based on some underlying parameters. These models are pretty
standard, and so the main thing the market maker has to do is keep his model inputs fresh,
post prices to potential buyers and sellers, fill market orders, and pick off stale limit orders.
Customers generally have access to older prices, and in a situation where the current price moves
every second, this clearly puts a broker at an informational advantage, which is why it was such
a lucrative field, especially in the days before the internet became big.
The broker makes money irrespective of movements in the underlying model price, as in general
he keeps his exposure to first-order (eg, delta) and second order (eg, vega) risks as close
to zero as possible.
But the brokering skill is quite distinct from what a speculator or investor does, which
involves a directional bet on the first or second order risks that brokers normally try
to erase. Brokers know as much about what makes prices move as plankton knows about what
makes the tides move. Much of being a broker is encouraging trading activity, and so many
brokers are quite adept at presenting themselves as more than middle men, but also men with
an angle, a story. A good broker is probably truly delusional about his prognostic abilities
because this allows him to appear sincere in his sales pitch for the latest trade idea, those
who don't believe their own stories make weak sales pitches. Most brokers are certain they could make money without
their customer flow, because the same self-deception that serves them well chatting up customers
generates delusions of strategic grandeur. Supreme self-assurance, even if undeserved, makes
for a good broker just as much as knowing your greeks (Eric Falkenstein - 2007-06-20).
Read this book:
20 Ways You Lose Money on Your Way to the Stock Market, by Scott S. Fraser 1996
To learn how to trade, you have to trade, just as you must play golf to become a golfer.
You won't become a competent trader by reading books or attending classes.
The market puts you in as many unplayable lies and sand traps and on as many lightening-fast greens
as a round at Augusta National. And never underestimate the competition. You are doing battle
with institutional money managers with giant staffs of MBA's handling billions of dollars;
professional traders like Victor Niederhoffer, who is a Harvard grad with a Ph.D. in finance
from the University of Chicago; hundreds of market makers and specialists; trading firms
with unlimited computer power; and individual professionals like Warren Buffett or George Soros,
not to mention amateurs in the tens of thousands. It is heady competition, and you must be
prepared to take on all comers.
If all this were not tough enough, the securities industry does everything it can to rig
the game in its favor.
Never assume for a minute that you are playing on a level course.
(Chapter 9, Options DeMystified, Thomas McCafferty, 2006)
This chapter informs on Mutual Funds.
Mutual Funds are assembled from common stocks;
hence, Funds share the same risks as common stocks. You need to
know what you can lose by owning Mutual Funds. A mutual fund is not an
investment, a mutual fund is a speculation, a bet you make that when you need money it will
be available; furthermore, that it will have increased and multiplied. Yes, it's a
speculation, a gamble, a gamble with your life's savings, which you ought to consider
inviolable.
First - you must pay income tax on money you never receive.
It is called Distribution - meaning the Mutual Fund(s) made distributions - and none of it went to you. But you pay tax anyway. This reduces returns on money by billions.
During the 2000 bear market, mutual fund investors were hit with $345 billion worth of capital gains charges even though the market lost $240 billion (Michael Maiello, Forbes Magazine).
In short, the tax laws will punish you even though you are innocent.
Durng the boom and bust of 1997-2002, mutual fund managers collected $250 billion in fees for themselves, pocketed it, while millions of investors suffered a net loss. In short, investors are taxed by the government and swindled by the managers.
Mutual funds are supposed to be monitored by its own directors. They are supposed to be independent of the fund's managers. Turns out that is not so, they are not independent because they are compensated annually at an average of $386,000 each and compensation is controlled by the managers who appoint them (Kuttner 139:2007). So now we have fund money supposedly belonging to investors but great sums are siphoned off by managers, directors, and government.
What's more, if you make a mistake on the complicated tax forms which are required for those who trade stocks then the IRS may ask you to come in and explain your calculations, which they themselves do not fully understand and are prone to misinterpret. In short, you can be wholly innocent or make a human error in understanding the tax law and yet the IRS can cause you one heck of a lot of trouble over your stock trades. Even treasury bonds can cause you pain in your dealings with the IRS. Not entirely facitiously I suggest if you do not have money then you won't get in trouble; stay out of stock and bonds. Don't use credit cards, don't borrow money, don't have a mortgage, don't own anything - then the bureaucracies are less likely to abuse you.
Second - logically there is little difference between a mutual fund and a Ponzi Scheme.
A mutual fund, particularly a large fund group, will advertise continuously, will market its various products through many avenues. This marketing brings in a flow of new customers with new money. This new money can pay for withdrawals of old money; that is, a new customer deposits money and agrees to pay into the fund at the rate of $200 a month, for example, then a customer who has been in the fund for a long time decides to withdraw $200 a month, so there is an equalization, a debit and a credit, as in double-entry bookkeeping. The Big Fund can be losing money in its trading activity, can be extracting exorbitant fees for managing the Fund, yet as long as a greater number of new customers can be enticed to deposit money in the Fund there will be no problem paying out. When new customers can no longer be obtained then a problem will exist that cannot be solved.
By Bob Van Voris
Nov. 10 (Bloomberg) -- Bayou Group LLC, a Connecticut
hedge fund that went bankrupt after its owner was
charged with fraud, settled the first of dozens of
suits seeking $137.6 million from investors who
withdrew money before the collapse.
Last year, Bayou founder Samuel Israel and finance
chief Daniel Marino pleaded guilty to fraud for using
phony accounting to fool investors about the firm's
performance. The two men falsified financial
disclosures and used new investors' funds to pay the
demands of older investors, prosecutors said.*
*This was a Ponzi scheme. The fund managers took in money from
new investors and paid that out to earlier investors to make
it appear the managers were making money for the fund.
In fact, their funds were losing money and the
scheme was used to keep it afloat with new money coming in as a
result of marketing and sales fraud. The report said the firm
was operating as a massive Ponzi scheme.
Bank runs in the 1930's caused liquidity crisis. The system of partial reserves was at fault. The money was not in banks, it was floating around in Unit Trusts, the equivalent of today's Mutual Funds. Banks had to sell fund shares to get money to give to depositors. So the markets dipped, and dipped, and dipped. An identical thing is going on now (2007). Only its not the corner banks suffering, its Hedge Funds. The Hedges must sell investment vehicles to cover losses and when investors ask for their money freezes are put in place. Just like Bank Runs in history. Mutual funds may be in the same predicament. Fear among shareholders will show up as requests for redemption, for withdrawal of funds. Thus Funds will have to sell off shares because the money (cash) is not in their account. A mutual fund is not an investment; such a fund is a speculation, one bets the money will be there as needed. It may not be there.
You can research this logic by gaining an understanding of the Ponzi Scheme. This can be done with an internet search engine. For starters click your mouse on these examples:
Third - Mutual Funds are not investing your money. Mutual Funds are trading your money.
You gave them money and gave them authority to do with it as they please with it. Mutual Funds trade stocks and bonds in an effort to make their mark, get stars and points they can brag about. That means when a Mutual Fund exceeds the Market Index, or exceeds other Mutual Fund returns. But when Mutual Funds trade the stocks in their portfolio they are gambling. Look for the "turnover rate" in a Fund you want to investigate. Often this is 100% or 200% meaning they are turning over their portfolio completely, maybe twice annually; that is they are trading, trading, trading! What is not generally known is that fund managers often receive kickbacks from exchanges and brokerages, called soft money, in return for excessive trading activity (your money is used, the managers get the kickbacks).
Trading is not investing - trading is gambling! A euphemism for gambling in amateur circles is speculation. The honest to goodness real, genuine speculators are counters and rely on a background of statistical analysis to ascertain whether they are placing bets within positive parameters of probability.
To trade well is to count well; to count well is to predict well; to predict well is uncommon (Syncreticus).
Fourth - Mutual Funds use esoteric accounting to their best advantage.
It is not possible for the average investor to validate anything a Mutual Fund publishes about itself. What is more, so-called Hedge Funds seldom disclose anything about their strategies; the SEC is only recently investigating Hedge Funds; for enlightenment see these sites:
#1-A Hedge FundsPeople investing
through U.S. mutual funds have had to run a gauntlet of abuse
(Anonymous).
Data I have seen says 80% of mutual fund managers
underperform indices (Philip J. McDonnell, Professional Statistician,
Professional Trader).
The real game has been not to beat the indices at
all, but rather to feed fund managers with the money they charge the public
(Nigel Davis, Chess Champion, Professional Trader).
Unfortunately there is no easy solution for those who don't have a lot of money or
won't take personal responsibility for their own money with perhaps one
exception. That would be to find a respected trust
department. They have at least a fiduciary
responsibility. You will not make a great return on your money
but you wont lose it either. I spent 23 years as a financial advisor
for regional firms and national wire houses, so I know what I am talking about
(Steve Leslie, Professional Trader).
Fifth - Mutual Funds are operated by individuals who make their living by setting up Funds and taking a cut of all the money they manage.
They get their cut regardless of whether the Funds makes money. Fund Managers are compensated at rates which are exorbitant. Even if the Fund you invest in has produced a gain on your initial investment, nevertheless, you would have a much, much greater return if it were not for the large amount of cash taken out by various fees charged by the Management of the Funds in which you deposited your hard earned money. Why do you want to pay exorbitant fees to lose money?
Sixth - If you have an IRA or 401-K:
OR other types of unsupervised regular withdrawal from your pay check and it is deposited in a Mutual Fund or other type of managed financial vehicle, then you are giving your hard earned money over to be gambled by trading in the stock market. You, yourself, would never gamble your money in the way money managers do - unless you are a high roller.
Gambling can be defined as a game of war, an outsider against an insider, a customer against the house, an expert conning a naif, a war of words in which deception is a key component. The mutual fund business is war also. One fund against other funds, one giant fund assemblege against the market, one manager against other managers. War is the essence of trading, and trading is the mark of money managers. The basic textbook for money managers is an ancient book: The Art of War, by Sun Tzu.
Seventh - Very likely you do not know what your Fund(s) do with your money.
You have a right to know. It is your money. If you are opposed to gambling then you ought to stop giving them money to gamble with. On the other hand, if you love to gamble then take your money to Las Vegas, get a room at the best gambling joint, eat the best food, see the best shows; go to the tables or slots and throw your money on them. You will lose, of course, but you will lose faster and the pain will disappear faster; and you will be compensated by the fun you have. But if you invest in Mutual Funds then your pain will last as long as you keep funneling money into them. And you won't be having fun!
Eight - Even pension funds lose money.
You may be putting money into a labor union pension fund, into a teachers union pension fund, into any organization-type fund. The fund will gamble just like other funds. Banks gamble. Pension Funds gamble. Insurance companies gamble. Mutual Funds gamble. A Religious Fund gambled, and lost everything. You need to know what is going on in the fund where you put your money. Do not stuff your money in a fund and forget about it. Stop your contributions until you fully understand the Fund Business - a Business set up to make money for Money Managers. Find out what is going on, how the money is invested, traded, what the turnover in the portfolio is.
Pay attention to your money. And think of Price as Loaded Dice!
Ninth - Mutual Funds mail out newsletters and monthly publications in which they tout and promote certain funds.
All the while they tell you to buy these funds they often are actually selling off that portfolio.
For instance, a Famous Fund Group promoted Technology stocks when they were at the same time selling off their portfolio in their Technology Fund. Duplicity of the highest order! And your hard earned money gets eaten up by them - you will never recover the money they chew up. For reference see WSJ, 1/24//97, p. C1 and WSJ, 5/9/96, p. C1 (Jeffrey Vinik).
Sounds like a lot of money. 10 trillion dollars, or ten trillion euros,
or ten trillion yen; actually a mix of all currencies. All kinds of funds.
Mixed funds, mixed-up funds too.
Where did that money come from? Well it was printed by central
banks so to speak. Made up out of paper and ink, quite
insubstantial substances. More than that, made up out of
imagination, expectation, sentiment.
They will not likely run out of paper and ink but at some point
imagination will turn, expectation will turn, sentiment will turn
into sediment. That ten trillion is just paper - as it stands.
It can be said no one actually has that money. It's not money
until its taken off the table. And according to the article cited by
a list member, insiders have already taken a lot of paper out
of the market and put it into private accounts; or did they
send it overseas? (Ken Smith - March 11, 2007).
Recent good times have been fueled by a flood of liquidity supplied
from the huge pool of savings in China, some other Asian nations
and oil exporting countries (http://www.bloomberg.com).
That China Pool can be likened to equity pools that historically have
been able to manipulate stock prices, reaping riches for speculators.
Whatever entity is controlling the China Pool is sure to be a major
speculator, be it a private organization or a government entity,
perhaps the Central Bank of China, if there is such.
Yet we must be on guard; not that we must be fearful, only on guard;
because when there is a lot of money on the table winners are always
tempted to remove some or all of it. In fact some of it was taken off the
table February 27. This is not bearish, this is prudence.
Ken Smith, June 5, 2007
The friendly folk who manage America's pension money, America's
Mutual Funds, have acquired wealth that fund investors will never see. For
instance, as president of Fidelity Investments, the Boston-based investment giant, which her family
owns, Abigail Johnson, 41, is a billionaire.
Rank on Forbes 400 list: 12
Net worth: $12.5 billion
Vehicle owned: 2000 Mercedes-Benz E320 Wagon
Source: Massachusetts Registry of Motor Vehicles
John Jakobson, a member of the NYSE since 1955, says: "The game never changes, just the players. The more there is to steal, the more it will be stolen." (WSJ, 10/5/2005, p.D14)
"This isn't just at the New York Stock Exchange or on Wall Street; it's in the entire financial world. It's a gene flaw, I think. You know, whenever they say it's not the money - it's the money." (What Goes Up, p.462, by Eric J. Weiner, 2005)
Tenth - There are 18,818 different mutual and hedge fund securities out there, all doing very similar things. Does your rational mind truly believe they can all make money, by beating each other to death in a market war? Think again: the textbook for these fund managers is The Art of War, by SunTzu.
Thousands of them have negative returns - losing money day and night. Investors are put into these financial vehicles on advice of so-called financial planners, brokers, advisory letters, and fund propaganda. If the public were informed then perhaps millions of these folk would choose an Index 500 Fund, at least. And enroll with the major fund companies, stay away from small outfits whose likely agenda is to profit by exorbitant fees. This caution extends to many banks who are now peddling funds instead of providing interest for your deposited money; money that could be in a savings account earning a respectable return; see, their agenda is to put you in a fund and keep your money with no return to you for the rest of your working life.
Mutual Funds DO NOT guarantee anything. Financial Planners DO NOT guarantee anything. Stock Brokers DO NOT guarantee anything. Money Managers DO NOT guarantee anything. What is more Bank Mutual Funds DO NOT guarantee anything! An IRA DOES NOT guarantee anything. A 401-K DOES NOT guarantee anything.
Everything about Fleece Street is promises, promises, promises; hot air, false hopes. If you get verbal promises these are not legally actionable, verbal promises are hot air. The word promise may not be used. In fact devious forms of manipulative language is the general way promises are made. If a claim to guarantee is not in strict WRITTEN legally actionable language and YOU have a copy, then the guarantee is hot air. Think about this: Are you gambling with your retirement money! Are your kid's college monies at risk - because you did not read the books cited above?
Since there are no guarantees then Mutual Funds are gambling instruments. And fraud is ubiquitous. You can do your own search of fraud in Mutual Funds, fraud in business, fraud on Wall Street, fraud in banks, executive fraud, accounting fraud.
For instance, use a search engine to find subjects such as this: Annuity Fraud
Fidelity Investments, A major financial institution offering annuities, makes contradictory statements about its offering of annuities.
On the same page of its marketing magazine, to wit:
"Income that will last as long as you live"
followed by a disclaimer
"Guarantees and lifetime income payments are subject to the claims-paying ability of the issuing insurance company."
Meaning your money is at risk.
You are gambling if you give them your money, your IRA, your 401-K..
(Fidelity Magazine November 2005, page 4, mailed each month to clients; clients who, by the way, are not under a fiduciary umbrella).
To learn more about how Funds cheat you go to these sites:
Here is another shocking example of fund deception. A
Fund advertises, telling us if we put in $10,000 today then in 30 years we will
have $100,662 if our return is eight percent (8%). This is fraud
from many angles.
First, we are not likely to get a profit each year of
8%. Second, each year that $10,000 is held passively in a fund we
will lose 6-7% by inflation. You may be told by the government or by
charlatans that inflation is less, but the way they calculate inflation is
fraudulent. Elsewhere in this document you will find inflation
references.
In the 30 years we leave that $10,000 in the Fund that
promised $100,000, at the end of that time we find that inflation has reduced
the purchasing power to dimes on our dollars.
What is more, in the 30
years the $10,000 is in the fund, there will be market crashes that reduce that
sum considerably. See elsewhere in this document for a list of
historic market crashes and their frequency.
Last, think about our
longevity. Think about the statistics of accident and death.
Think about war, think about economic depression, think about the
hundred circumstances between now and 30 years from now that could send our
expectations spinning down a drain pipe, into a sewer.
No one knows what
will take place between now and 30 years hence. No one knows whether
the human species will be here in 30 years. There is an exception to
these statements: if we are still here we do know inflation will continue
unabated. We do know taxes will continue unabated. And
in the end, even the pittance we get as a return if we live another 30 years,
even then, taxes will further take money away from us. The United
States Internal Revenue Service will not let you keep the remains of your
investment for yourself. If you are alive at the end of 30 years and
take out the remains of your investment, then the IRS will take away their
share; and we have no way of knowing what that share will be in 30
years. But the way the fiscal deficit keeps climbing, now in the
trillions, it is not likely income taxes will disappear. I can say
unequivocably no one will be able to put $10,000 in a fund today and have
$100,662 in purchasing power 30 years from now. And, unequivocably,
no fund marketing program will tell this to you. You must think for
yourself.
The next topic will be stocks, but inflation is related to stocks. Let me preface the topic with this remark: the Dow may in the near future sell at 11,000; but this will be in depreciated dollars. Thus illusory, a money illusion; like black magic.
This chapter informs about stocks. If you have lost money in the stock market previous to this, it is not probable you will get it back. This is curious, isn't it! In fact you probably cannot make money owning stock - unless you get in at the bottom of a price wave and exit at the top. Seriously, I mean this as a true observation. I have been there and back. You will find my testimony unusual, because few in this world relish admitting anything less than success. But you need not accept my say so on this; you can research for yourself.
When your eyes get big over a marketing inducement to buy stock you will not notice anything being said about the taxes you will pay if and when your stock makes money for you. Also, nothing will be said about the way inflation will eat up your possible profits; and the cannibalistic feast will last as long as you own stocks. No stock investment is a value when commissions and fees and taxes and inflation diminish the return. We deserve better.
Investors with mutual funds in taxable accounts might be in for a year-end surprise.
The United States Government will not only tax your profit, it will also continue inflating the money supply, printing fiat money, and when you withdraw your money you will find it will buy less than it would have purchased at the moment you put cash in the stock. So you will lose two ways right off the bat. Any profit will be taxed and what is left will be worth less than when you put the money into your account. That's just for starters!
The bond market is an inflation trap.
[The Distortion Theory of Macroeconomic Forecasting, by Steven Marquard, 1994, Chapter Eleven]
The reason I make that bold statement is government bonds are the source of inflation. The Establishment's landscape painters will not explain to the public, to you, that when the government runs a deficit then brand new money is put into circulation - in the amount of the deficit - and such new money is inflationary (Gary Allen, 1976, p. 136). Hence, any time the nation's budget is out of order, that deficit spending is rampant, inflationry pressures are extant. How inflation ties into the stock market can be ascertained by counting, by quantitative research.
Victor Niederhoffer, Ph.D. - former Statistics Professor, International Trader, writes on
counting techniques. To read go to:
#8 YOU CALCULATE FOR YOURSELF - INFLATION
What is more, when IRS taxes you for income, and your tax rate is 15%, then you have only $85 minus 4% inflation which ends up with you having only $81.60 return on your $1000 T-bill, or any other investment for the same amount; that is, stocks, mutual funds, or plain CD's. You cannot escape inflation and taxes. You cannot escape the government.
"When inflation is defined as an increase in the quantity of money, the remedy becomes obvious. Businessmen cannot create money. ...only governments and their agencies can. To stop inflation, all that needs to be done is for governments to stop authorizing any further increases in the quantity of money (Greaves, pgs. xix-xx, 1978)."
Parenthetically I wish to comment on the issue of banking power, hyperinflation, and gold: in context with the previous links on inflation.
David Hackett Fischer in his book The Great Wave writes on inflation and its impact on the social fabric. What else is economy for if not for social fabric, although we do not see this notion put forward when economists articulate their incomprehensible formulas.
Hyperinflation vaporizes all contempory social fabrics. Well, vaporize may be a strong term. What is meant is inflation is not good for the social fabric. A social fabric deteriorates at the rate of inflation.
Fischer said:
The historical record of the past eight hundred years shows that ordinary people are right to fear inflation, for they have been its victims - more so than elites. And ordinary people who live in free societies have a special reason for concern. During the turbulent decade from 1963 to 1973, forty nations suffered from rates of inflation above 15 per cent. A recent study has shown that thirty-eight of those forty countries abolished or abridged democratic institutions in one way or another.
I looked in Fischer for studies on gold and found many references. Gold created the most difficulties when it was in abundance, because it was the beginning of a price revolution. The more gold floating around the more inflation and social disruption that occurred.
So drawing from that we can infer that gold, in the context of inflation, is no better than fiat currency, freely printed paper money, if gold is in abundance. The value of gold is in scarcity. The value of a dollar increases also when it is scarce. But, the dollar is not scarce because it is freely printed, at will, by our government and allegedly by foreign presses creating perfect counterfeited paper.
Regarding inflation, its danger, its threat to the social fabric, as historically proven, the major point in forecasting the future is to keep in mind that when the dollar is not scarce the dollar is not valuable. Think about retirement in terms of social fabric. Retirement will be the social fabric of your life at that time. If you buy stock today and hold it until you retire, then you need to understand that even if a stock price will be higher in the future the future will be denominated in depreciated money, because of inflation, which is interminable, insideous, and creeps up unawares over a long period of time; and the time involved will be from now to your retirement.
There is no way to resolve this predicament by investing in bonds because bonds will be worth less in that their buying power will be diminished by inflation; their dividends will buy less and the cash-out purchasing power will be dimes on dollars following the 10-20-30-40 years you are invested in bonds.
What is importantly worse about inflation is that our government in collusion with the Federal Reserve Bank is irresponsible in its mandate to curtail inflation. In fact, rather than cut inflation this agency often creates inflation intentionally. You must heed this statement by the newly appointed head of the Federal Reserve Bank, Ben S. Bernanke - the man who will replace Alan Greenspan. I quote: "The U.S. government has a technology, called a printing press," he said, "that allows it to produce as many U.S. dollars as it wants at essentially no cost."
There are those who tout value stocks, as if value is understood by everyone. How do you assess value? Value is a difficult concept to grasp. Actually, it is more or less relative to individuals; which is why we choose a different spouse than the next person. In the financial world value to me is an investment that makes some money for me. That is the only value worth considering. What value Fleece Street places on an investment vehicle is irrelevant to me personally. Whether a stock is in the Dow 30 and valued high by the media means nothing to me unless it is making money for me.
To reiterate, to me value is making money on an investment. That is the only value worth considering. If it stops making money then it has lost its value - money is the value. Think of a losing stock like this: if you put $100.00 in the bank and each day it was held by the bank that sum lost $2.00 so that at the end of 50 days you had zero left:
Is that something you would do?
Again, if you put $100 bucks in the bank and each day it was in the bank that sum LOST two bucks every day so that at the end of 50 days you had ZERO left in the bank:
Is that something you would do - is that reasonable - would you stand by and watch your money disappear?
Would you let the bank keep taking money away from you? No - you would not!
So don't stand by in a daze while your stocks and mutual funds lose money! Learn a methodology for trading. The aim is to buy on improvement from low levels, and sell on weakness at tops.
There is one way I am sure of to protect yourself from mistakes in the stock market if you are a do it yourself person and if you rightly do not trust stock brokers and those who make a living by selling products on which they receive a commission; in which case your interest is not primary, it is in their interest to peddle you a product, for their profit. And that way is to subscribe to The Value Line 600. See the following site:
Heed this: there is no guarantee anywhere - not even Valueline. In fact, you often discover a stock portfolio from ANY advisory service will actually underperform a money market fund.
To learn more about how company executives can cheat you out of your money start researching company fraud. And search on your own - research is easy on the internet. On Google you can find such sites as this:
#1 Legal Beagle
#2 Legal Beagle
#3 Legal Beagle
#4 Legal Beagle
The goal of business and capitalism is profit.
The financial service industry is not in business for any other purpose.
Think about an agenda that sets out to make money by using other
people's money. They use your money to make profits for themselves.
Profit is the motive for taking risk. Profit is also the stimulus for overextended greed, often leads to chicanery. Wherever there is money there is risk of unscrupulous individuals with hidden agendas. Do your own research - affirm my testimony.
The vast majority of stock in this country, after all, is held by the richest 5 percent of the population. These well-heeled folks are the beneficiaries of the great stock-market run-up, which is being fueled by more average working folks, those relative newcomers to mutual funds, 401(k) plans....(see Chapter 8, The Judas Economy).
Begin by looking at these expose sites:
Market Crash Data*
------dates ----points lost
1 1997-08-15 -28.6
2 1997-10-27 -69.0
3 1998-01-09 -31.3
4 1998-06-15
-25.5
5 1998-08-04 -44.0
6 1998-08-27 -53.0
7 1998-08-31
-78.0
8 1998-09-10 -33.0
9 1998-09-17 -28.5
10 1998-09-30
-30.5
11 1998-10-01 -32.0
12 1998-11-30 -31.7
13 1998-12-14
-27.0
14 1999-01-21 -33.0
15 1999-02-09 -28.4
16 1999-03-23
-39.3
17 1999-05-14 -34.0
18 1999-05-25 -27.5
19 1999-07-20
-30.0
20 1999-08-30 -25.5
21 1999-09-21 -26.7
22 1999-09-23
-30.1
23 1999-10-13 -37.4
24 1999-10-15 -33.4
25 2000-01-04
-55.5
26 2000-01-24 -42.5
27 2000-01-28 -43.5
28 2000-02-09
-26.5
29 2000-02-18 -32.0
30 2000-03-07 -43.5
31 2000-03-30
-26.5
32 2000-04-12 -43.9
33 2000-04-14 -90.9
34 2000-05-02
-26.2
35 2000-05-03 -27.8
36 2000-05-10 -31.5
37 2000-05-19
-26.5
38 2000-07-05 -27.1
39 2000-07-21 -26.0
40 2000-07-28
-31.5
41 2000-10-06 -29.0
42 2000-10-10 -25.3
43 2000-10-12
-34.0
44 2000-10-17 -31.5
45 2000-10-25 -30.5
46 2000-11-08
-30.0
47 2000-11-10 -31.0
48 2000-11-22 -33.5
49 2000-12-15
-31.5
50 2000-12-19 -30.0
51 2000-12-20 -37.0
52 2001-01-02
-30.5
53 2001-01-05 -44.5
54 2001-02-02 -28.0
55 2001-02-16
-28.0
56 2001-02-21 -28.6
57 2001-03-09 -35.9
58 2001-03-12
-52.6
59 2001-03-14 -29.0
60 2001-03-20 -28.0
61 2001-03-28
-29.0
62 2001-04-02 -27.5
63 2001-04-03 -41.0
64 2001-06-14
-29.3
65 2001-07-06 -29.0
66 2001-09-06 -30.0
67 2001-09-17
-57.3
68 2001-09-20 -33.0
69 2001-10-29 -29.5
70 2002-01-29
-34.8
71 2002-02-04 -28.0
72 2002-04-11 -28.0
73 2002-06-03
-25.3
74 2002-06-19 -25.4
75 2002-07-10 -35.5
76 2002-07-18
-30.0
77 2002-07-19 -32.0
78 2002-08-05 -30.5
79 2002-09-03
-34.6
80 2002-09-27 -29.0
81 2003-03-24 -29.5
*Data discovered by scholar from Hawaii.
#13 Risk Explained - conclusive study here
#14 Risk - Mortgage Collapse June 2007
YOUR MONEY CAN BE FROZEN IN A CRASH
If we can not predict a systemic market event in advance, and we seek to reduce the impact of such an event, we must prepare.
With individual savers eager to speculate in common stocks themselves, or willing to loan their savings to others for the purpose, with corporations able to reap greater return from loaning retained earnings for stock speculation than from productive activities, with banks ready, willing, and able to create money and lend it to speculators, there is little that is mysterious about the fact that there occurred a great boom in the stock market during the 1920's - or that there followed the Great Stock Market Crash of 1929. No one knows, and probably never will know, the exact quantity and quality of adverse statistics required to flip mass optimism into mass pessimism. We know only that the longer the flip is delayed the more certain it is to occur (Hixon, 1991).
Miss the 5 best
days, each year, in the market from 1966 to 2001, a study points out, and a
$1000 investment shrinks to $150, a -5.3% annual return.
What that fails to tell you is if you miss the 5 worst days in the stock market each of those 35
years, the $1000.00 becomes $987,000.00 for a 19.3% annual return.
Suffice to
say, many studies now show that missing the worst days is more important that
participating in the best days.
As Victor Niederhoffer states at the
start of Part II of his book Practical Speculation the one thing that
comes before everything else in the quest for investment success is survival. To
survive you need to know how to time the market so you are not always in the
market, that you are out of the market when out is the only way to survive.
(Marlowe Cassetti).
Victor Niederhoffer, Ph.D. - former Statistics Professor, writes on counting techniques. To read go to:
There are very few times in the course of a decade that money can be made in
the stock market. The markets move in waves; think of ocean waves,
deep valleys and high tops. Professional traders make money on the
short side when the wave cannot go up any higher - the market will begin a
decline. At this point they sell stock short or hold cash and
treasury bills. For the average person the safest strategy is to
avoid short selling; just switch to a form of cash.
There are two basic
human emotions intrinsic to trading stocks: fear and greed. The
average Joe and Jane do not handle these emotions well - particularly if they
short stocks; fear will overwhelm and the position will be aborted, usually with
a great loss of money.
You might restrict your Point and Figure
methodology to buying IShares that are positioned to gain upward momentum along
with the next bull market. In brief, no short
selling, just wait for a pivot point to buy and hold until the P&F
methodology presents an alert to sell.
The next money making opportunity is when the market is frightening, scary; when no one trusts the market for stocks. When everyone has lost much of everything they had in stock, or is holding their money in cash or safe vehicles and the stock market seems a disaster, then is the time to buy stocks. Like an ocean wave, the market will slowly return to an upward slope. Then be patient and wait with your investment in stock until you see the opposite has happened again; when improvement has stalled, when your methodology alerts you. Then another cycle, another wave, will begin. That's the way the market works. Up for a long time then down for a long time. The market can be timed for its cycles and waves; you can learn how to do it. The moon and the sun move in cycles, the market moves in waves. To catch the waves the suggested methodology will assist you.
Do not buy and sell stocks in between the top and the bottom. You will waste money and energy trading; you will experience a psychic drain. Frequent buying and selling (active trading) is a losing game for public traders, non-professional folk; also that's why mutual funds and big turnover players never get ahead. They are trading, trading, trading. They are not investors. You need to be an investor - an investor who gets in at the bottom and out at the top. Your methodology will assist you.
Here is an example of how unprofitable the stock market can be: Say you buy 100 shares and it returns $100 profit. Internal Revenue Service then bills you $15 unless you are in 35% bracket, then IRS will bill you $35 (by the time you read this capital gains tax will have changed). Broker charges $16 for the round turn trade. You have paid 3% to borrow margin money to make the trade.
In the 15% tax bracket you now have less than $69 depending on how much margin interest you paid. Say you now have $60. Maybe you don't use margin, in which case you have $69.
You bought newsletters, subscribed to a daily paper such as the Wall Street Journal or Investor's Business Daily; you bought a computer to track the stock market, purchased monthly data to analyze the market, paid for expensive software thinking you can analyze buying and selling opportunities. These are not tax deductible expenses for a public trader or public investor. These expenses are tantamount to losses.
You have held the stock for endless days, weeks, months, maybe years, just to earn a pittance on each 100 shares you bought. What is worse the market might not make money, it might go down. In which case you lose $100 for each 100 shares you purchased. Truth: you can lose it all, it has been done by hundreds of professionals and millions of non-professionals.
When time to do your income tax you discover the IRS does not allow you to take your full losses. You lost $10,000 this year but you are allowed to deduct a loss of only $3000. That's the law!
What is more, there are IRS rules which punish you if you trade actively. If you buy and sell stocks actively then the infamous "Wash Rule" will apply to you. Meaning many of your losses will be complicated trades. This will be recognized when you fill out your income tax form. To enter tax data for an active trading strategy is a nightmare.
Another thorn in the investor's side is the averaging system many brokers advise. Cost averaging is putting in $100 a month, for example, into a mutual fund by automatic payroll deduction. When after 5-10-15-20 years you want to sell then the IRS requires you to determine a "cost basis" for your purchases. Each $100 you put into your fund is a separate cost basis. Mind blowing exercise which even professional accountants have said "It can be mind-numbing. You can end up with pages and pages of records trying to figure out the basis" (Thomas Ochsenschlager, American Institute of Public Accountants --- WSJ D2 Wed Jan 11 2006).
When I leave money in a brokerage account I sign an agreement,
mandatory, that the brokerage is permitted to use the money in
my account any way they choose. That is, the
brokerage pools my money with your money and uses it any way
they want. I am guaranteed to get my money
out if I choose, but while it is in their hands it is essentially,
for all practical purposes, their money.
And they use it as if it is their money.
The same goes for banks, I deposit money and they use it any way
they want.
A bank or a brokerage can use my money to trade against me.
And believe me they do.
The raison d'etre of all financial institutions is to first make money for themselves; your interests are secondary.
I would be interested in other ideas as to how to navigate the minefield of
pseudoness we are exposed to with a view to precluding the public from
losing so much more than they have to, as well as going about their life as
puppets beset by false strings (Vic).
I tried to gather facts which point in the direction Vic proposes. I don't have
the whole story, not sophisticated myself, but there is plenty of ammunition
at http://stockpriceadvisor.com that could help members of the public.
The crux is, however, the public must read my material and would have to
read or see a video showing material others might publish online or in
a book. The public, however, just shoves money into their IRA, and so on,
in a regular monthly withdrawal and leaves the end result to fate; at least,
insofar as I can determine.
It's kinda like "Jesus Saves" yet the world has not changed for the past
two thousand years; not one bit has human nature been modified. So also
giving up information about the market's machinations is wholly
insufficient.
The great ruses continue and will be found to be operating in another
2000 years; and I would bet if that were a 'futures bet' I could take (Ken).
To compound your injuries the government inflation policies will eat away at the money in any account you have, and keep eating away - forever. In the list of books at the beginning of this exposition you will find a book The Inflation Swindle. You might find it on the internet by searching book sellers.
In logical terms that is not a practical way to manage the earnings you have set aside for retirement. When your money is tied up it is not of any other prudent use to you. You could be in real estate. And that is exactly what many investors have turned to; regardless of taxes and regulations and management problems. You have a choice: real estate or learn what you need to know about the stock market.
Real estate is tangible, at least. It doesn't disappear into a
pit on Fleece Street; you can sit on it, improve it, rent
it, live on it, see it, taste the dirt, smell the
concrete; and pay the taxes.
Real estate overall is still one of the best investments one can make. Regardless as to what occurs to the structures sitting on the ground, the ground is still there and good land is a scarce commodity. (Alan Millhone).
People prefer to raise kids in single family
dwellings. A two-income household prefers
single family houses; houses, not condos
because a condo is nothing but an apartment.
Ground with grass and goffers, that's special.
A private yard, flower garden, place for monkey
bars and kid's slide, small plastic swimming
pool, and a bedroom with sound proofing so
kids dont' hear the moans and groans coming
from the partent's bedroom.
Yes, but always remember taxes and inflation. Always remember governments are the source of both. Always remember you cannot do anything about this circumstance. And since a social fabric deteriorates at the rate of inflation - expect to see changes.
The author and owner of this web site is not an investment advisor. These pages are written as instructional, informational only. You must be responsible for yourself when reading anything said about the stock market. Do not construe these texts as advisories.
Do your own research. Do not construe these texts as advisories.
This web site "StockPriceAdvisor" is not licensed to tout methods or strategies or provide financial advice. There are no stock brokers here. There are no financial planners here. No one at this site has authority, no licenses, no MBA degrees, no titles, no certificates legally authorizing an advisory status. However, there is no law against providing factual information and observations; television and other media are prolific with opinion 24 hours a day. But you cannot believe them, they are not trustworthy, they have an agenda of their own - to collect revenue from what they do; and what they do is what pleases their sources of revenue. As such they are not acting in the best interest of investors.
The media continually spews forth a kind of pop economics much of which is exactly wrong. If one avoids listening to the meme du jour and does the research personally then much of the media silliness can be avoided. Simply eliminating the wrong and hurtful memes can improve one's investment performance. (Philip J. McDonnell, Investment Specialist, Statistician, Quantitative Analyst).
The author of this site is an investor who understands a method that successfully times the top and the bottom of stock market cycles - the ocean waves. Anyone can do the same with the information you find on this site. Keep your money for yourself by following the information provided on this site. If you read this information over a few times you will find answers to your financial agenda, for a lifetime of financial security.
The following
citation was given to me by a friend* who has acquired money in the stock
market. He has juggled millions and is currently managing money
running into over 200 million dollars. He has been an active
speculator in every conceivable legal method of trading and investing, for
nearly a lifetime; over 50 years since his indoctrination to the world of
gaming, investing, trading, bargaining, finance; his financial finesse is
unprecedented. Here are paragraphs my friend provided to me; but
the advice given here was written in 1887 - and after over 100 years it is still
the best advice available.
But few gain sufficient experience in Wall Street to command success until they reach that period of life in which they have one foot in the grave. When this time comes, these old veterans of the Street usually spend long intervals of repose at their comfortable homes, and in times of panic, which recur sometimes oftener than once a year, these old fellows will be seen in Wall Street, hobbling down on their canes to their brokers' offices.
Then they always buy good stocks to the extent of their bank balances, which they have been permitted to accumulate for just such an emergency. The panic usually rages until enough of these cash purchases of stock is made to afford a big rake in. When the panic has spent its force, these old fellows, who have been resting judiciously on their oars in expectation of the inevitable event, which usually returns with the regularity of the seasons, quickly realize, deposit their profits with their bankers, or the over plus thereof, after purchasing more real estate that is on the up grade, for permanent investment, and retire for another season to the quietude of their splendid homes and the bosoms of their happy families (Henry Clews, Twenty-Eight Years in Wall Street [1887]).
To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest reward.
In short, if you play stock waves the only time you will make money is when price waves are low. There is no money in high price waves. Sounds paradoxical doesn't it! More on this in the final pages of this site.
* Fleece Street is a dangerous place for your money.
Look at a garden. If you don't have a garden then imagine one. Flowers and vegetables are grown in gardens. To begin with, seeds are planted. Then the garden is nurtured with fertilizer and water and hoeing and spading. The garden is "worked" on.
The stock market can be considered as a garden. And news can be considered as seed. The media can be considered as fertilizer. Financial news anchors and talking heads can be considered as water boys and water girls. Buckets of fertilizer and water are spread around the garden, in this analogy of the stock market.
In short, news-seed is planted in the stock market. Then watered and fertilized. There is a system and a method to news, and it is devious. Very little news is worthy of attention. Seeding the stock market is very like seeding a gold mine. In the case of a gold mine the infamous practice was to exhaust a mine of easy pickings then plant gold seeds in the vein to create an illusion of richness. The mine was shown to investors from the city who became excited over the prospect of wealth, clearly visible in the seed.
News is seed. Several major American financial publications have become very successful at seeding the stock market. The theme is constantly drummed into readers "Buy High - Sell Higher." One possible scenario to these publications is inducing the public to buy stock insider speculators have previously acquired at lower prices and currently selling. Another scenario is insider speculators are selling touts short to the public. Remember this: news is seed. The media is fertilizer; and much of it has an odor.
For instance, on news manipulation, Japan's leading business paper has been described
as a tool for reality manipulation; rather than reporting news it constructs news that shapes
reality (Unequal Equities, Zielinski and Holloway).
(In the 1920's) Bankers simply went directly to the media to tout opportunities.
Between 1927 and 1931, Morgan Bank participated in more than fifty stock pools that the New Deal
would later outlaw. Other shady practices included syndicates, or groups of elite banks and
individuals, openly manipulating stock prices and bribing reporters to "talk up" stocks.
By October 1929 more than a hundred stocks were being openly rigged by colluding market
operators (Ron Chernow, The House of Morgan, 1990, 307).
Try as you might you will not find evidence to the contrary for price manipulation in 2007.
What is more, you will not find government any more vigilent in 2007 than in 1929. Political
leaders at the highest level receive campaign contributions from price manipulators. Ever hear of
quid pro quo?
Michael Savage, a San Francisco radio talk show host often speaks to such corruption as part of the
structure destroying America's trust in government.
(Reference: Other People's Money, by Nomi Prins, 2004)
The stock market Exchanges are notorious for planting news, according to books written by Richard Nye. These books are cited in Chapter 2 above. Furthermore, one can think of investment banks and large brokerages and major funds and insurance companies with stock holdings which 'seed' because they wish to sell to the public, unload on the public, to induce the public to buy or to sell. What is more, Funds are divided into Bulls and Bears; each has an agenda needing support, so each uses propaganda to influence investors to put money into THEIR fund. Such capital market agents have deep, deep pockets and thus are able to purchase tons of seed and fertilizer - with which to work their garden.
Daiwa Securities spread the rumor that Nippon Meat Packers had an anti-AIDS product which would soon be approved by the U.S. Food and Drug Adminsistration. Prior to this Daiwa had accumulated 18 million shares for its own account. Shares rocketed. Daiwa sold into the buying epidemic (Chancellor, 1999).
One can draw a lesson from the Daiwa rumor. That is, buy the rumor and sell as soon as price makes its first half-day drop. The greater less is, however, knowledge that the stock market is a scheme to take your money away, first and foremost, always and in every way.
Seeding the market is a major business.
The day after October 1987 crase, representatives of Japan's largest brokerages - Nomura, Daiwa, Yamachi, and Nikko Securities, collectively known as the *Big Four* - were summoned to the Ministry of Finance. They were ordered to make a market in NTT shares and keep the Nikkei average above the 21,000 level. Complying with this request, the brokers offered their most important clients guarantees against losses in order to encourage them to reenter the market. Within a few months, the Nikkei had recovered its losses and was progressing to new heights. In private the Ministry of Finance officials boasted that manipulating the stock market was simpler than controlling the foreign exchanges. Excerpted from The Devil Take the Hindmost, by Chancellor, 1999
There is an old Wall Street saying that says "News follows price".
Simply put it means that after a decline bad news will come out to
explain it. After a price rise good news stories will come out to
explain it.
To some extent the markets are pretty good predictors of events. That
partially explains the relationship. Conspiracy theorists would claim
that somebody always knows something and that is the underlying
explanation. Occasionally that is true as well.
However there is a deeper truth in the News Follows Price saw. Simply
put the media needs something to write about. They sell fear, they
provide information. It is all in pursuit of market share which
ultimately leads to advertising revenue.
When an author writes a book he does so because he has something to
say. The situation is quite different for a media writer. He HAS to
say something everyday. It doesn't matter if he actually has something
important to say today. His job is to write something anyway. Ideally
it will be something so compelling that you, dear reader or viewer, will
stop your busy life and check it out.
One of the classic ways to make up a story everyday is to look at the
market action and try to explain it rationally. You can always write
keen insights like 'The market went up on higher interest rate fears'.
The next day might be, 'The market went down on fears of higher interest
rates'. Invariably this leads to reinforcement of the meme of the
day. In the 90's it was the dot com meme. Recently it has been the
declining real estate meme.
But memes evolve. They evolve because the media is under pressure to
make the story new. A new twist or angle keeps the meme fresh and
compelling. First it was the real estate bubble has burst. Then it was
the sub prime mortgage market collapse. The latter evolved into the
liquidity crisis. Then the Fed eased. Oops, better not talk about that
too much that could be good news. It is better to milk this meme for
all it is worth. Then it was the dollar is crashing. But when a meme
has been around for a while it gets stale. The media needs to turn to
the 'how bad could this get' angle. Perhaps you have heard the old
Johnny Carson jokes. Carson could tell a new 'How cold was it' joke
every night for decades.
That is why we are seeing stories about recession. More media is piling
onto the meme. This could lead to recession, global warming, nuclear
winter and a falling sky! Today's article featured the new angle that
real estate prices are inaccurate. It is really worse than they are
telling us! The article cited one estimate that 1.5% of houses in
Denver might be reported as 10% higher in price than they really are.
Do the math. That would result in a .15% over valuation in the Denver
market stats - a fraction of 1%.
Quick check the sky. Is it still there? I live in the Seattle area so
I can't check the sky as usual. But I trust it is still there (Philip J. McDonnel).
*Philip J. McDonnel is a writer at:
This chapter informs about Advisory Services
Assume advisory services have an agenda of their own. Often their agenda is to profit from their advisories. For instance, the service may front-run all their advice. An example would be when a #1 rating is given to a stock. The advisory service could be influencing 100,000 readers or one million readers or 50 million readers. Since a huge population is following the advice there is a hidden opportunity for tremendous profit if that service trades ahead of the publication date of its advisory service. That is, front-running is to buy stock at $1 prior to publication and sell it for $3 or more when the seed prompts buyers into the game; or buy for $25 and sell for $28-$30 as soon as the followers come on board with their money.
Or in the case of an advisory indicating a particular company has fallen on bad times, the advisory service could sell stock short prior to publication date. Quite commonly, and to repeat - quite commonly as soon as the public has come on board with their money then there is no more money to go into the stock and it plummets back to were it was. And finally, that stock may never return to where it was when the advice was given to the public. Subscribers lose their money and the front-running advisory service profits.
Given that the major goal of capitalism is profit, that the operation of a business or service is enhancement of profit by all legal means, then the assumption there is a hidden agenda is not unreasonable. It is good common sense to figure that there is no free lunch and an agenda is in place for someone other than you to make a profit.
The category Advisory Service includes television, newspapers, magazines, subscription newsletters, and major internationally known companies that have been in the business for ages and have built a reputation thru marketing their products. The major names are widely recognized and need not be quoted here.
No advisory service</