In troops of apes, higher ranking primates will demonstrate their power and authority by ripping an infant from its mother’s arms, taking the infant by the legs and smashing its head against the nearest solid object.
Infanticide is the best way to describe the 476 point collapse of the Dow yesterday.
The point: what little you have is subject to the moods of the 800lb gorilla called Wall Street.
This infanticidal gorilla wants you to believe there are rules in the troop. For your issues to have any value, they should be backed up by assets and the production of tangible goods. The trading price of your issue should be proportional to your issue’s earnings. If you faithfully care for your issues through dividend reinvestment, you will not fear old age. You will enjoy it.
The “gorilla” is the Wall Street market makers. Merrill Lynch, Morgan Stanley, Fidelity, Price-Waterhouse, Goldman-Sachs and the like control an overwhelming amount the market. The biggest investment houses get to trade first when a buy or sell order hits the floor of NYSE, Amex or NASDAQ.
Not you. You go last.
By controlling such huge segments of the “free” market, the media frequently refers to these houses as market movers. With a few timely trades, the biggest investment houses can turn a bad day into a good one.
These houses have the ability to construct a very good view of the future of the market. They have known that Internet stocks are complete crap. They know the rules of price/earning ratio logic. They knew the market was going to crash. They were derelict in their duty to issue sell recommendations to their clients before the big NASDAQ tech crash.
In a smaller crash last week, not one single market maker issued sell recommendations on their analysis of stocks. Not one single major market analyst issued sell recommendations.
Everything was buy, buy, buy while the market was going bye, bye, bye.
That’s not much of a free market. Certainly not capitalism as described by Adam Smith in 1776.
The US brand of capitalism has its origins in fascism with a mutated, inbred annexation of classical economic liberalism. It’s called Neoliberalism.
Neoliberalism differs from Adam Smith in that the competition is removed from the transaction equation. If possible, government and any social safety nets—like jobs—should be removed as well. Nothing stands in the way of profits. Not even the facts.
Statistically, it is impossible for an entire market to have the same incompetent behavior towards their clients. Somewhere along the line, somebody would tell it like it is because the truth, in a market of either outright lies or derelict complacency, would give a competitive edge to whoever breaks with the status quo.
If you own securities in a market maker, that investment house owns the securities in your name. When 20 million people all have 100 shares of IBM and their broker is Merrill Lynch then Merrill Lynch controls all of those shares. Let’s say that those 200 million shares of IBM represent 30% of all outstanding shares.
Then, Merrill Lynch effectively owns 30% of IBM, one of thousands of shares in our market.
Add all other market makers and there is not a single corporate board that these few houses don’t control on any major market on the planet.
One of many traits that major investment houses share is that they make it expensive to trade securities. Unless you trade a minimum number of times per year at a set volume, they do not want you trading on the open market. Not that you could if you wanted to but to keep their free market lie going, they put their minimum requirements just out of reach or require a heavy load of responsibility from the paying investor.
That leaves ordinary online traders and representatives of the glorious “new” economy. These trades represent less than 10% of total market movement and are insignificant to the control of major investing houses.
You, as an individual investor, stand nowhere. The market movers make money no matter what. The 800lb gorilla is still in charge after it rips your baby investment from your arms, smashes the baby’s head against a rock and kicks the carcass down a hill.
Evolve. Stop playing their game.
