A few years back I remember seeing a television special about a group of stock market investors. I can’t remember if they represented different companies or different nationalities but they were sitting in a room full of computers and they had available billions of dollars which could be invested instantly. In fact they had so many billions of dollars available that they could move the market with their investments. Before the closing bell on Wall Street they could take advantage of that market move and reap millions of dollars in profits.
The market used to be a place where an investor could buy stock in a company that they felt was going to make a profit. Over a period of time the company used that investor’s money and either made a profit, or took a loss and the investor then either reaped the reward, or lost his investment.
The market has always been a gamble and like in Las Vegas, you may win or lose, but with smart investing you can increase your odds of winning.
But after watching the TV special it was obvious that these were not investors that intended to make long-term investments. These were people that had found a way to beat the system. They had taken the chance out of their investing and had found a way to fix the game.
Since that TV show aired, the huge investors have honed their skills to the point that they can suck as much money out of the market as they want and it is all legal.
Back in the 80s a group of people found a way to count cards in the game of Black Jack. They found that by placing a team of players against a Las Vegas dealer, they could control the outcome of the game by counting cards. This made their bets not a gamble but a sure thing. Of course, Las Vegas quickly figured out what was going on and made rules against card counting and teaming up against the dealer. The casinos had to outlaw card counting because if they hadn’t they would have went broke.
The SEC which governs Wall Street seems to have missed the TV special of the billionaires moving the market. They have rules against insider trading and they enforce those rules every now and then by tossing someone like Martha Stewart in jail.
Our government is dumping billions in the form of bailouts into the failing industries, but it is like trying to fill up a bucket with a hole in it. The more they dump in, the more the investors with billions of dollars will continue to take out. If it isn’t fixed through SEC regulation then we’ll never be able to fill up the bucket.
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