Tuesday, March 2, 2010

Why Most of You Can Not Beat Wall ST

You got a job all day. They're 24/7 gamblers. They don't have a clue what's going to happen in a decade. Worse, they don't give a damn. It's irrelevant in their 24/7 short-term trading world. Irrelevant to guys making anywhere from 10 times the income of the average American to making more in a single year than you'll make in a lifetime. Irrelevant in a culture that needs no moral compass and lives by one rule: "Greed is very good!"

Eight Reasons Wall Street Will Lose Another 20% in the Next Decade

The world of 2010-2020 is far more dangerous for investors than it was in the "Lost Decade," as many economists now call the years from 2000 to 2009. Listen closely: Here are eight reasons Wall Street will lose another 20%, why the odds are heavily against you "Winning the Loser's Game" by 2020:

1. Foreign policy and wars. The investment world's far more volatile and dangerous today than in 2000 when Bush was elected. America started a preemptive war-of-civilizations by attacking Iraq under false pretenses, the single biggest foreign policy blunder in American history, a war that's had the unintended consequences of playing into the hands of our enemies, made them stronger, and unnecessarily cost us trillions, weakening America as a military and economic power, with no end in sight.

2. Monetary policy and the Fed. Your world of investing is also in a far worse condition as a direct result of former Fed Chairman Alan Greenspan's too-long legacy of free-market Reaganomics ideology funneling endless cheap money to Wall Street banks. Worse, three regional Fed presidents recently endorsed an indefinite continuation of current Chairman Ben Bernanke's cheap money policies, thus accelerating the next bubble. But worst of all, when he had a chance to prove he was a real change-agent, President Obama made the biggest domestic policy blunder in history by reappointing Bernanke, a Greenspan clone, a Reaganomics ideologue and a Trojan Horse protecting Wall Street with trillions in cheap money loans, guarantees and toxic asset takeovers, all hidden from taxpayers.

3. Dysfunctional politics and the Party of No-No. America's unpredictable and hostile political world will also have enormous long-term economic consequences. In this age of online citizen journalism the public is becoming more and more aware of the breakdown of Washington politics and the two-party system, the widening cultural gap between the rich and the rest of America, the exploding conflict between Corporate America and Main Street America and the "GOP Party of No-No's" scorched-earth defense of all-things-business while fighting everything favoring the masses, including health care and financial reforms. Warning: This trend will get far more destructive. The elections of 2010 and 2012 are guaranteed to make your investment world a dangerous no-man's land.

4. Statistics guarantee you will lose at the Wall Street casino. Remember: Between 2000 and 2009 Wall Street's casino was in fact a "Loser's Game" for Main Street investors. The Dow did in fact drop from 11,722 in 2000 and from a peak of 14,164 in 2007 to the 10,400 range today. The fact is, Wall Street's lost an inflation-adjusted 20% of your retirement nest egg in the recent "Lost Decade." And the odds are high they'll lose more of your hard-earned money in the next decade. The game's fixed.

5. Wall Street has absolutely no moral conscience. Wall Street's greed knows no bounds, thanks to the moral hazard endorsed by the Fed and Treasury bailouts, Wall Street's obsession with mega-bonuses for insiders and their addiction to the new high-risk, high-leveraged, high-frequency derivatives gambling game that easily generates $100 million trading-profit days. Their cultural DNA must ignore lending to the little guy, to homeowners, to small businesses, to regional banks, to all the businesses that money-center banks used to help before investment bankers took over. Wall Street's DNA makes them incapable of feeling the pain the rest of America feels in an economic downturn with underemployment near 20%. Wall Streeters have zero moral conscience. Unfortunately, it's guaranteed to get far worse.

6. The 'Third Meltdown' is dead ahead. America is again being propelled to the edge of an economic cliff, already burdened with an estimated $23.7 trillion debt from the misguided political decisions of the past decade. Endless deficits lie ahead. Yet politicians, CEOs, bankers and Main Street folks have all failed to learn any lessons. As Yale's Robert Shiller put it: "Until we understand and address the psychology that fuels" these bubbles, they will "keep forming. We recently lived through two epidemics of excessive financial optimism, we are close to a third episode." To another meltdown, to another Great Depression.

7. Lobbyists fueling America's new 'Capitalist Anarchy.' America's becoming a "socialist" nation? No, the truth is America's becoming the world's first "Capitalist Anarchy," thanks to the explosion of lobbyists running government. This trend shows no sign of abating. Imagine: 42,000 Washington lobbyists today, versus a handful in 1975. Other experts estimate 261,000 of these selfish special-interest "influence peddlers" throughout our nation. And it's so bad the Center for Public Integrity just reported that "more than 1,750 companies and organizations hired about 4,525 lobbyists, eight for each member of Congress, to influence health-reform bills in 2009." Worse: this emerging "Capitalist Anarchy" is draining the Treasury with endless deficits piling up more killer debt that will negatively impact future market returns.

8. Taxpayers cannot afford Wall Street's next bailout. I'll bet you're in total denial about this one. And you can bet Congress will avoid action till it's too late. But when the bomb detonates all hell will break lose. Moral-hazard critics warn that Wall Street's arrogant "too-political-to-fail" bankers actually believe taxpayers will bail them out again when they trigger the new meltdown. Wrong. Even if our politicians are dumb enough, the money won't be there. That scenario will inevitably trigger a new Great Depression. This is our destiny.

In fact, it's highly doubtful that you, your portfolio, your family or your America will make it past 2012, let alone into that comfortable retirement you may be planning for 2020. The Wall Street casino's version of "Liar's Poker" is a "Loser's Game," and the odds are high are they'll lose a lot of your money again in the coming decade.

So again I ask you: Do you really want to bet on the market winning for the next decade? Do you really believe that stocks, mutual funds, ETFs, commodities and bonds will make a profit in the next decade after Wall Street's miserable performance the past decade? Trust them, you lose.



  1. Rather depressing read...but better to know the truth...better to know the boogy man is hiding in the closet waiting for the lights to go out...TexasBlondie

  2. At least now we know where we stand...;)

  3. Let's see... "do you really believe that stocks, mutual funds, ETFs, commodities and bonds will make a profit in the next decade?" Only thing left out of this laundry list was real estate.

    If there is nowhere to hide then forget about. Be happy enjoy whatever time is left. Go with the flow. Stop listening to these manic depressives.

  4. Did Red write that article? He has been saying this for the 2 years I have known him.

    it was a great day for JAG and the plays reccommeded by the posters here. Dont know whats up with SLW tho, siver up and slw flat.

  5. anon.....this manic depressive had very non depressive day in this market......hehe

  6. All,

    You all should know stock market is a rigged casino which makes all participants from those who control it to those who want to profit from it CORRUPT, that goes for me, you and GS. What ever you do, DO NOT LIE TO YOURSELF. We are what we do. Having said that, human nature is amazing. Most admit market is rigged and controlled especially these days thru algos, FED manipulation,,etc and talk about it a lot especially on the SKF board, BUT and that's where the catch is, they are still not only willing but want to make money from it.


  7. The article does not say anything about what to do. Gold, cash, or what? I agree with most of the points, but what is alternative?

  8. a corrupt manic depressive? I thought I was just a greedy old man.

    Joe is right we are what we do. For me the market is entertainment. Not much else to do at night here in the jungle and it keeps me home nights which makes the little woman happy.

    Without the ability to trade and monitor the markets daily I would not place a bet in this casino.

  9. Anon,

    You are correct, the article does not mention what to do. In my opinion, the best course of action for most of you is to have some physical Gold and the rest cash. If you have a regular job, try to save money, control your spending and get out of debt.


  10. yup physical gold and slash your spending now......use coupons reduce dietary intake to basic food groups ......stop waste....

  11. By the way kli himself admits he does not have the strong moral convictions required to stay away from the market and therfore he is not a HYPOCRIT. We are either all part of the problem or part of the solution. The only difference between GS and retail traders is POWER & Control capability. One has the means and tools to make EASY MONEY which is what market is ( not earned thru hard work and actual production), and the other side is trying to catch some of the easy money, BOTH GUILTY.


  12. It is not easy until you learn how.
    "It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."
    Jesse Livermore

  13. CBS,

    The discussion is not about learning how to make easy money, it's about staying away from easy money ESPECIALLY if you know how to do it since IT'S WRONG and OBTAINED thru corruptive means. The person who stays away from the market because he is convinced he/she won't be able to make money from the market IS NOT BETTER than those who participate in it. The better and wise person is the one who has the capability to do it and SAYS NO because the game is corrupt, that person is part of the solution.


  14. Joe pretty much nailed the corrupt nature of the blood money of the present markets. Joe has proven you can make money in this environment, keeping your trading asymmetrical to adapt to the insider trades, but do you really want to. You can win but you grow more cynical and dark as you see the final end game of the Grand Super Cycle.

    For traders enjoying the carnage, the upper daily bollinger band on the S&P500 has been met. If a move to 1130 is not established, the next likely targets are around 1095 then 1055 over the short term.

    Sorry been busy on 2 separate issues. 1 - utilities have been very busy at an unusual pace filing for increases in the essential things people need to survive, a combination of higher commodity costs and shareholder expectations. 2 - the real estate market for prime distressed properties is still in full swing with the government incentives and loose credit, got edged out in a cash deal when someone was willing to cut a back room deal with Bank of America to get a property in short sale foreclosed in record time and picked up by a 3rd party on the county court house steps before proper public legal notice.

  15. Joe,
    Thank you, I feel slightly admonished.
    I am just trying to learn.

  16. Joe,

    re: "We are what we do"

    Your post is the most brutally honest & refreshing commentary I have seen on what is going on with the market & the psyche of traders!

    Have you ever considered running for President?

    Lord knows we are in dire need of Honest, Straight Shooting Leadership!!