Why I hate Wall Street Wizards...

Other than the fact that they are like lawyers, parasites who profit from both the fortunes and misfortunes of others, the primary reason I hate these bastards is that they produce nothing of value and destroy anything and everything they can as long as they can make a profit.

My naive view of Wall Street …

As I was taught in junior high school, Wall Street is America’s capital source: the money raised on Wall Street helps for companies and fuels their growth and expansion while they provide goods and services to the people of the world. I was also taught that the markets were self-regulating and that supply and demand was the operative principle. If nobody purchased your products or services, you went out of business, innovated other solutions, penetrated other markets – and moved forward in a positive manner.

The reality …

At the time, I did not even consider that the markets could be rigged or that the market could be manipulated with disastrous consequences. However, in High School, various and sundry Wall Street scandals were included in history class and I began to consider Wall Street somewhat like keeping a pet tiger. It could be rewarding, but the tiger could, in a moment of instinctual preservation or hunger, make you its next meal.

But what makes me really mad is …

Wall Street’s attitude that decent companies who are associated with problematical industries can be artificially manipulated to the point where their survival is questionable.

From …

“What to Short When You Can't Short Financials”

“It has been, and continues to be, a disastrous situation for financial stocks.”

“Now, all the major investment houses are either bankrupt, no longer independent or looking for options rather than stay as investment banks. Since we can't short these stocks anymore, there may be another way to take advantage of this weakness through another sector also impacted by weakness in the financials.”

"’The issue we want to discuss for a moment is the "collateral damage’ to businesses because of these companies' failure and continued problems. It takes technology to run these large-transaction and heavily regulated businesses. Now that so many are no longer around and the rest are seeing business shrink, what happens to the technology companies providing these firms with their technological infrastructure? These are big contracts that are disappearing, and with existing clients falling like flies, the possibility of growth or up-selling these customers has also become impossible.”

“In fact, a large percentage of revenue for technology companies as a whole comes from the financial sector. The financial sector is the largest buyer of tech goods and services. One tech sector that is heavily impacted by these changes is the outsourced technical firms located in India. With financial companies not spending at the same levels and further planned cutbacks, these companies are taking a major hit to their business.”

I have purposely deleted the stock that was used as an example.

“... This is a deteriorating and vulnerable configuration. We would use the strength, or further strength, back to $28 as an opportunity to sell this stock short, looking for a possible decline to the upper teens. The trade can be stopped out on a move above $29, or if traders are looking for a looser stop, above $30.”

Wonderful …

Here is a company struggling to survive amid a catastrophe not of its making. Employees dependent upon their paychecks, insurance and retirement benefits. All placed at risk so the Wall Street Wizards who produce nothing can line their pockets. And I am not talking about the individual investor … I am speaking about the middleman: the person who takes a chunk of change for buying and selling stocks, bonds and commodities. Chaos and confusion are their friends as it maximizes both buying and selling opportunities. If the market was quiescent, these are the guys most likely to whisper “Blue Star is in play” into the medias ear or capitalize on some other story which provides a plausible excuse to tell their customers to buy or sell.

These are the slimeballs that caused the current crisis with their artificially engineered financial products which they assured everybody were of investment grade with iron-clad risk management built in. They kept talking and collecting their bonuses right through the crash.

What can YOU do?

Before gambling on the market, make sure that your salesmen (account executives, financial consultants, financial advisors, whatever) is not simply churning your account for his personal profit.

When selecting an advisor check the source of their compensation, check their background, check their own trading history and make sure that they sign an agreement that they are  acting in a fiduciary capacity to protect your interests. If they are not willing to sign a statement of fiduciary responsibility, tell them to pound sand. A good advisor may charge a fee for their services, but it is better than risking everything on someone who is struggling with his Porsche payment.

Remember, unethical people may work for brand-name companies and, in the final analysis, they will almost always back their employee rather than admit to malfeasance or improper account handling.

-- steve

Quote of the day: “The best way to predict the future is to invent it.” - Alan Kay

A reminder from a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Reference Links:|What to Short When You Can't Short Financials

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"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

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