Friday, January 29, 2021

The Stock Market - Just Like Betting In Las Vegas

The Blogger is a big supporter of Capitalism as long as there is a level playing field.  The reality is that there is not a level playing field.  Big companies, even those losing money for years, have access to credit and capital that small companies just don't have.  This makes it very difficult for small companies to become big companies and if by some chance they do, big companies buy them to prevent competition.  All of this distorts markets and actually contributes to both personal and corporate income inequality.   The fact is that very Big Companies, which includes Wall Street are part of the Deep State protected by politicians that benefit from their largesse.   As they say, one hand washes the other. 

Wall Street and the Stock Market is not much better than betting in Las Vegas.  We are watching market manipulators playing games with companies like Game Stop and now others.  They are manipulating stock prices to drive them both up and down so they make billions of dollars in the process either way.  Short Selling, that is betting that a stock price will go down should be outlawed because when the big boys do this they then work extra hard to drive the stock price down by talking it down.   This should be illegal. 

The reality is that those control billions of dollars in the stock market everyday are placing bets.  They are not into stocks for the long term in many instances.  They are trading daily to make nickels and dimes on a share of stock times millions of shares.   We are in a particularly dangerous time for small investors.  And, borrowing money on margin to buy stock is not the best idea either. It is kind of like borrowing money to play the slot machines.  The stock market has never been higher.  So if we have any kind of big event in the world, we are likely to see a big fall in the market.  With Biden killing jobs daily, just watch next October, which historically is the traditional month when the market crashes.  Beware, as a downturn is inevitable. 

Funny, every so often we see a huge fall in the market.  That is when the sharks swoop in to take advantage of panicked investors fearful that they will lose everything.  This Blogger has lived through "crashes" several times and I have never sold.  I just hung on only to watch prices come right back 6 months later.  The reality is that smaller investors should not try to beat the market because the big boys are in and out before you know what hit you.  Just invest in a variety of mutual funds to spread your risk.  Work with your broker to determine what makes sense for you given your stage in life.  

We probably do need more laws governing the stock market to provide more transparency.  And, if we want to go to Las Vegas to gamble, we can do that.  The stock market should not be another version of Las Vegas.  

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