Wall Street makes money every day on bad news. Any bad news will do. CEO has sex scandal. Excellent. Department store buys only from sweatshops. Excellent. Janitor embezzles a billion from an auto maker and moves to Singapore. Excellent.
Terrorists crash two commercial aircraft into the twin towers of the World Trade Center… $$$cha-ching$$$… watch the money roll into the accounts of the biggest market movers.
Today’s market was a fraud.
This is how the dirtbags on Wall Street work. You put your little nest egg in their hands, in the stocks they recommend and you live for years away from this money on a “stock strategy” of false hope called “buy and hold”.
Meanwhile, your brokerage house holds your shares. Essentially, the shares belong to them and they hold their value in your name. Over time, like the great bull market of the ’90s, your investments probably averaged 20% to even 35% a year. It took most of the decade for the average Joe Portfolio to make money in the market. For example, 120% over 5 years was not unheard of.
But wouldn’t you like to make 35% in a week? How about 120% in a day?
It’s called selling short and there’s no doubt that short selling was occurring in today’s 685 point drop at the New York Stock Exchange.
As a quick description, when an Investor knows that their particular stock is about to take a dive, they exercise the option to sell short–making money on the fall. An Investor will borrow a particular stock from their broker, say IBM at $100 per share. As long as they borrow the stock, the Investor typically pays 7% interest on the value at the time of the short sell contract. If IBM is a probable 30% dive within the month because historians have discovered that Thomas Watson had plans for a hardcore porn theme park in East Berlin, you do the following:
1. Borrow the shares at $100.
2. Wait for the dive.
3. Sell at $70 a share. Pay interest to your broker.
4. Pocket $30 per share.
On an ordinary day, selling a stock short is a dangerous situation. The typical Investor can hardly be typical. The Investor must know their company inside out and backwards to make such a gamble because a short sell that goes up instead of down can cost a significant amount of money plus interest plus you still need to relinquish the shares.
Monday was no ordinary day. The market was closed for four days and everyone with their head screwed on straight knew that Airlines weren’t flying and consumers weren’t shopping. The market was a surefire dump. The entire $7.2 trillion economy was at a screeching halt.
Since capitalism requires everyone to watch out for themselves, the brokerage houses did just that. In yet another glaring act of negligence, all financial gargoyles in the media instructed everyone to “be patriotic. Put money in the market tomorrow.”
They basically wanted you to ignore your self-interest so they could serve theirs. Since most investors are idiot clones that don’t fully understand the rules of the game they are playing, investors did exactly what the financial gargoyles told them to do–against concrete market conditions, against logic.
Seasoned investors and brokerage houses prepared to sell short. They were preparing since jet number two and everyone was together on today’s market rape. The evidence is in the conspicuous absence of warnings on all major media outlets about the dangers of a rare and guaranteed “short seller’s” market.
If you lost money today, you lost it out of ignorance. Everyone from the CEOs of the brokerage houses to the journalists on your screen were counting on your naive patriotism seeping into your financial decision making.
Congratulations. You, the red Investor, are an idiot.
