Yes, we have arrived at the conclusion that stock market participants are the unwitting victims of institutional cheating. The facts aren’t in question and the powers-that-be don’t bother denying it. Sure, they put a nice little spin on it but truth is truth. Pay attention. What we’re about to share with you should make you swear off this form of investing forever.
Free vs. Manipulated Markets
Modern financial portfolio theory rests on two basic assumptions regarding the free market. First is that investors are rational. Second is that price is determined solely by the market. Take away either of these assumptions and you no longer have a free market. Now it is manipulated. By its very nature, a manipulated market means that someone is getting cheated. Consider that a manipulated market means an outside force acts on the price. If it’s too low, sellers get cheated. Too high, and buyers are getting a raw deal. Can you think of any recent instance where the federal government (under the auspices of ‘for the public interest’ of course) have intervened in a supposedly free market to manipulate the price toward a stated goal? We can.
Interest Rates
The fact that the Federal Reserve interferes in free markets by unilaterally lowering or raising the interest is not a matter for debate. They do it and it is accepted as a matter of course by most Americans. But what are they actually doing? They are imposing an artificial constraint on financial markets when they deem them to be too high or acting as a “helping” hand when it is decided they are too low. No matter which side the Federal Reserve lands on at any moment in time, half the current investors in the market find themselves on the wrong side of the equation.
For a fascinating discussion of this topic, check out THIS ARTICLE by Daniel Amerman. It’s a whole five course meal of food for thought and an expose’ of how large scale cheating of citizens becomes ingrained in our handlers. Don’t get mad. Get even. Get out of the stock market and into income property investing.
The Commercial Investing Center Team
Flickr / DonkeyHotey