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Wall Street Deceit and Main Street Revulsion

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I had the misfortune of listening to CNBC the other day while visiting my mother. The talking heads on the tube were discussing the surge in stock prices and the lifting of the DOW Industrials above the eleven thousand mark. They went on and on about how much of a psychological barrier the eleven thousand mark was and how that meant that the “recovery” wasn’t just some fluke and everything was going to be hunky dory and rosy from now on. They then began asking the question when the “retailer investor” (that’s you and me in Wall Street lingo) was going to get back into the market and really start cranking it up. They thought that all of us little, ordinary people with no money wouldn’t want to miss the investment boat. All I remember thinking was “How stupid do these people think I am?” Indeed, how stupid do the Wall Street moguls think we are?

I’ve never been much for the stock market. It seems that since college, with my family and all, I’ve been more concerned with earning enough for living from day to day. I’ve always struggled with debt and borrowed money to pay off old debt just so I could afford to pay my rent or mortgage, car payment, insurance, phone bill, electric bill, gas bill, food, etc. ad nauseum. I’m sure most of you know what I mean. You just never seem to own anything, you’re always paying for something, always paying off debt, and you never seem able to get ahead. I think that’s the way the banks want it. You pay with credit for something that costs ten dollars and end up paying fifty when all is said and done. I hardly had the funds to think about the stock market and investing.

During the boom of the late nineties, however, I did find myself with a bit of money to play with. I had actually been participating in this contest that Yahoo! Finance was having where they “provided” you with a hundred thousand to invest and you tried to end up with more money at the end of the month than anyone else involved. I had done pretty well for myself over the course of a couple of months, so I decided to try with some real money. I did fairly well, even making enough money where I was able to pull some out and pay off some debt. Things were looking pretty rosy at the time.

Ah, but life is something that happens while you’re making other plans. Suddenly the dot com bubble burst. Like so many others, I was left with a whole lot of nothing. The stocks that had been growing by leaps and bounds were reduced down to worthless just as quickly. Being inexperienced, I had no idea when to sell even at a loss just to recoup some of my original funds. Companies that I owned stocks in were soon going out of business and even those who were still in business and making a profit had stock that had become so devalued as to be considered worthless.

When I reflect on it, I think that maybe it was because I was working at the time and couldn’t sit in front of a computer all day making determinations on when to buy and sell and play that game. I couldn’t take the time to cash in on a twenty percent gain or take my losses on a ten percent downturn. I just didn’t have that kind of time. I guess that I should have just invested in blue chips and funds because of that. But I know some people who had been making a living day trading who suddenly couldn’t anymore. I started losing money even on my 401K plan. Even the blue chips were losing money. There was a vast exodus of money from the market and I evidently wasn’t one of those who got the memo. There were quite a large number of mainly smaller investors who were in the same boat as I.

That was when I decided I didn’t need to put my money in the market any longer. I had a friend who had been investing in gold. He didn’t have to have any special knowledge to know when to buy or sell, he didn’t have to try to time his trades, he simply bought the gold and held onto it as an investment. He bought it when it cost about $360/ounce. I recently spoke to him and he still has it. He’s happy because, well, just look at how much gold’s worth now. My investments from that time period are worthless and he’s still sitting pretty. He even still has his job while I was downsized, but I’m certain that has nothing to do with our respective investments.

Then I hear the business channel posing the question “When are the retail investors going to jump back into the market?” Well, I don’t know about everyone else, but as for me, I’ve had enough. One of the commentators even mentioned that many “retail investors" are gun shy because they’ve been burned twice. I wasn’t even aware of the second burn because I’ve been out of the market for so long, but I’m guessing it happened when the housing bubble burst. You know what they say; fool me once, shame on me, fool me twice, shame on you. Fool me three times, shame on..? Well, I suppose after the second time I’d need some professional help to work out my issues.

There was a time when investing wasn’t so difficult. One could count on certain companies making a profit and depend on dividends being paid out to them. One realized when a company wasn’t making money and was in trouble and knew when he was taking a big gamble. That’s not so true anymore. Reporting and accounting tricks and regulation loopholes are hidden in voluminous tomes known as business law. Plunge protection teams and other market manipulators lurk on the sidelines waiting to protect the moneyed interests while the largely uninformed, little investor is hung out to dry. The rules are constantly in flux, or are not followed by the most powerful. To me, this is quite fraudulent, but those policing the industry seem to turn a blind eye to such things. Even when the justice system discovers fraud, it’s not likely that the small investor who lost money will get any back. If one is not an insider it seems to me that one has as much chance of making money at the local casino as in the stock market.

Yes, there are those who have been involved in the market and who really know what they’re doing that can find good investments. These people are not the “retail investors" that the talking heads on CNBC were discussing. I’m that kind of guy, the kind hoping to catch a wave and maybe cash in. I’ll tell you when I’m getting back into the market. Never.

Well, that might be a little harsh. Perhaps never is too long a time. I might get back into the market when I see a little more honesty. I might get back into it when the rules are better defined and transparency is restored. I might get back in when I believe I can do so without getting screwed, when the lines between investing and gambling aren’t so blurred. I might put some of my money in the market when I believe that fraud is no longer endemic in the whole system. When that’s going to be is hard to say. It seems to me that the establishment doesn’t really want to tackle those problems because the establishment is profiting from them. It seems that it’s always the little guy who ends up getting stuck in the rear at the end of the day.

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Last Updated on Wednesday, 28 March 2012 21:21