A cold hard look at Wall Street. Part 1. Posted by James Randolph on December 13, 2010
A cold hard look at Wall Street. Part 1.
December 13, 2010 – Gold investing gets a lot of bad press from Wall Street, so a no-holds- barred article by Paul B. Farrell in the Wall Street Journal’s Market Watch – 10 Reasons To Shun Stocks Till Banks Crash – came as a welcome and refreshing surprise.
It is no secret that Wall Street insiders continued to amass fortunes while individual investors lost their shirts. In explanation, Farrell cites a conclusion from an investigation into investment fraud: “Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.”
Over the past dozen years profits were up 203% while stock values of the S & P 500 rose a meager 7%. Where did the money go? According to Peter Morici, the former chief economist at the International Trade Commission, it was sucked off “by hedge funds, electronic traders, private equity funds, and aggressive M&A shops . . . which have multiplied over the last two decades.”
Among the biggest players, Goldman Sachs, J.P. Morgan, and Bank of America are reporting enormous profits while suffering few, if any, negative trading days. Plain common sense dictates, as Morici says, that “if someone is winning all the time, then someone else is losing. That’s the ordinary investor. Stocks have become a rigged game.”
As if any proof were needed, Farrell offers this: “Wall Street has lost 20% of your money in the past decade . . . And, worse, Wall Street will do it again by 2020 . . . It will lose another 20% of your retirement money.”
That alone justifies investment in certified gold, a debt-free asset out of the reach of Wall Street manipulators – but there is more to come.
Senior Staff Writer – Certified Gold Exchange