I don’t understand what is happening with my stock. The company is the same today as it was yesterday and it appears that they will be more or less the same tomorrow. Yet their stock value dropped significantly today – ostensibly because traders feared what happened in Europe.
What I know …
Profits on Wall Street come from trading stocks between those who are buying and those who are selling. Either way the broker makes a commission on the sale. Therefore, it does not take a genius to understand that stable stock prices are bad for business and a volatile and chaotic marketplace is good for business.
That there are those in Wall Street and elsewhere who trade when they respond to a story being spun by the mainstream media or some credentialed analyst. The story may involve the global economy, the national economy, the local economy. It may be a story about the business sector in which the company operates or the fundamentals of the company’s business. But it is a story that is used to move markets.
What I suspect …
In many instances, the actual details of a company and it’s operation may have little or no effect effect on its valuation when it comes to the broad thematic story being spun by the media and Wall Street. And that the large hedge funds and trading operations can materially affect the valuation of a company with its trading operations. Selling the company short to drive prices down and then re-purchasing the very same stock at lower prices to book a profit.
I think the game is rigged. The big guys dominate the market and while they generate modest returns for individual investors, the big money is reserved for the institutional investors and the executives who trade other people’s money.
I think that while the laws of supply and demand work in the long term, that local discontinuities in markets can be generated by speculators herded into a frenzy by their brokers and rising prices.
I also think that the government regulatory agencies, the SEC (Securities and Exchange Commission) and the CFTC (Commodities and Futures Trading Commission) may be hyper-politicized, concentrating on the cases the generate the largest fines and media attention, as well as being under-staffed and under-funded. No help for the little guy there if it doesn’t benefit the Administration or the Agency involved.
It pisses me off …
It pisses me off that our government, and the Federal Reserve, has made money available to financial institutions at an almost zero cost. With funds flowing, these firms are simply trading among themselves to generate outsized profits and executive bonuses while the American public earns little or nothing on their life-savings. After all, these financial institutions do not need their depositor's or investor's money when they can obtain investment funds from the government at next to nothing. Not only does the government screw us with fiscal policies leading to a declining dollar, increased inflation – but they have the nerve to continue to tax us in a thousand unseen ways.
The democrats talk about “economic justice” to promote their wealth distribution schemes while the average American is being raped by a hyper-political system pandering to the special interests – made possible by campaign funds and voter support as a quid pro quo payment to politicians for services rendered.
So when I see the overall market tumble because some market maker sees a chance to spin a story to increase the market’s overall volatility, it makes me believe that there is something rotten – not in Europe or Denmark, but in the U.S. political system.
With the democrats like Barney Frank (D-MA), Chairman of the House Financial Services Committee who believes that Fannie Mae and Freddie Mac are instruments of public policy. With democrats like Christopher Dodd (D-CT) who received a great mortgage deal as a friend of Countrywide’s Angelo Mozilo and denied he even knew that he was getting a better deal than the average American consumer. Like democrat Maxine Waters (D-CA) who believes that the people of her district are owed reparations even while she does little or nothing to clean up the cesspool of corruption, crime and chaos that exists. Not to mention the Rockefeller-style Republicans who pursued crony capitalism and installed incompetent people in high government offices. RINOs (Republicans In Name Only) like John McCain whose aisle-hopping legislation dealing with campaign finance, immigration reform and global warming is significantly flawed and panders to the special interests.
Solution …
We need to throw the bums out of office. The democrats and their RINO Republican buddies. To install a conservative like Ronald Reagan who knew how to curb the government’s self-serving ambition while promoting policies that benefit America and all Americans. We need to weed out the professional politicians whose corruption and complacency is destroying America. And we need to get the government out of meddling in the marketplace – where, year-after-year, they manage to screw up our economy while rewarding people who push paper – people who produce nothing – except disaster and heartbreak for the American consumer.
Think about your life and the lives of your family when you go to the ballot box. We need to take our country and our future back from the clowns who brought us to the brink of economic disaster.
As for me, I am not selling a single share in my company. It will survive. And, if it doesn’t, I will be the one to have taken the risk and the loss – with no government bailout in sight.
-- steve
Interesting Quotes ….
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” -- Philip Fisher
“A market is the combined behavior of thousands of people responding to information, misinformation and whim.” -- Kenneth Chang
“The four most dangerous words in investing are "This time it's different". -- John Templeton
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