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This article, if read carefully, will show you small investors that you are dead before you get into the Stock Market.
Thousands of computers are programed, by savvy techs, to buy and sell in seconds. These techs hover over their systems 24/7. The algorithms are changing constantly as the programmers tweak their particular system to find tricks whereby their computer trading system out performs the next computer trading system.
My son tells me that the truth is not exactly as it was given in the article. It is possible that as much as 80% of the trading activity is done by automated computer systems. Did you get the ID issue? It is greatly understated.
Computer trading systems stand only to gain from withholding IDs of individual sales. This makes it impossible to determine what percentage of trading is being done by computer trading systems and what percentage is by YOU and other little people. Remember, your broker, no matter how big he looks, is "little people" if he is not trading via a computer trading program instead of human analysis.
Again, all businesses today have computers. This is a new animal we are talking about. A computer trading system is an investment operation run 100% by computers. No one is checking the weather in Brazil before they buy coffee stock. No one is reading the latest political changes in Saudi Arabia before the buy oil stock. That is the diet of dinosaurs. The market is as much as 80% in a cloud no one can digest and define at any given moment.
In fact (this was not made clear in the article above), because of the computer system trading, no one really knows where the market is going. It is entirely possible that at some unpredictable second in the future, the whole market could be dumped if a computer domino reaction started, and no one would know it for up to ten minutes. By then, the market would be toast.
The vast majority of the time, you AND YOUR INVESTMENT BROKER, are buying from a computer that just dumped a devalued stock. You do NOT have a chance to beat this system. It is like a rigged roulette wheel in Las Vegas. The irony is, rigging is against Federal Law in Las Vegas, but this computer roulette system is considered decent upright business.
I predict that this market in computer Nirvana will one day blow Wall Street to bits. It is a market on weed.
If you want to invest, I would suggest the following:
1. Buy real estate. It rolls over, on average, about once every ten years. You have months or years, to watch the values go up and down, instead of seconds, which you cannot now do without a zillion dollar server system. Furthermore; if there IS a crash in the stock market, and if the banks close, and if the dollar crashes, dirt is still dirt and has a real value no matter where everything else goes.
2. Get out of debt-- ALL your debt. The money you save on interest is FAR MORE of a "return" on your investment than the pennies the computer system traders leave you with.
3. Go to ETFs in foreign markets if you simply cannot stand to leave the gambling world. ETFs are still being traded in a clunky old fashioned way, and you can actually participate. If you stay in baskets in Brazil, China, or where ever, using a trading firm like Charles Schwab, you can move you investment unlimited times for free. If you get a buzz out of the roller coaster, where everyone is an equal player, this seems to me to be the only fair game left in the stock game.
4. For 2010 and the next few years, buy a house and rent it. The sale price will be low due to the slow real estate market. And, for the same reason, many people are choosing to rent rather than buy, some simply because they don't have good credit. Rent prices are sky high, and you should be able to make some very good profit, or pay off the house in a few years. DO NOT tell the house seller what you plan to do-- they will gouge you, knowing you are about to make a killing. The only problem here is the ethical issue. Is it decent to use people this way? The answer is-- these people will have to rent or live under a bridge. If you want to feel right about it, then treat your renters like family so they are rewarded for coming on board in your investment scheme.
5. It used to be that you could play with penny stocks and eventually hit it rich. But, I would suspect that, if they are not yet in it, computer trading programmers are writing penny stock trading programs right now. I would suggest that is also insane.
6. If it does not bother your conscience, get a Federal Grant for something. Grants have been issued to determine how to properly use toilet paper and how to use a fork, etc. I know a rancher who got a grant to put up fences on his ranch and move cattle from one area to another and take notes. He made one small mistake-- he forgot to figure in his salary for the time he was putting up fences. The Federal people paid him just fine, but they scolded him and told him to do it over a second year, giving himself a salary. You do have to print one copy of a book to be filed in the Library of Congress so future bureaucrats can consult your research-- for what, I don't know. Just include the price of printing one book, say, $9000 or so.
7. Let's say you are in your 60s, like me, and you are out of debt. But, you feel your cash in-flow is not up to your future expenses. Go get a part time job.
I have printed up piano tuning business cards, and, at the inflated cost of piano tuning in our area, I could make some real return on my investment of a few hours a month tuning pianos. I have the tools, I have the skills, I would only have to invest in a small ad in the local newspaper. Pretty good prospect for a real return on investment, right.
If nothing else, you can be a door greeter at WalMart. All you have to do is push carts at people as they walk in, or swipe their receipt with a yellow marker as they walk out. And, you have somewhere to go in the morning.
8. Also, have you got a pile of old stuff from the 50s? Sell it on eBay. Sell stuff from your area to people who want it in Massachusetts. If you think you have nothing in your area to offer, READ HERE. I happen to know these people are making some very good money doing this. Ooops, you people in Mass.-- go down to Rockport, offer those artists to buy all their art that is not selling. Then make a web page with fantastic content on Rockport, the grand art community of America, blah, blah, blah. Use motif No. 1 as a page header. And, sell the junk art for a good stiff price. (I know, it is now motif No. 2-- 99% of the readers will not know that.)
I realize the US Federal Government has made it harder and harder for people to do creative things these days. But, they dare not stop America 100%. If they totally kill small enterprise, the beggars don't eat. We pay their salaries.
There you are-- Eight ways to do better than playing the Stock Market. You owe me lunch at the Dahlia Cafe in Liberty Hill if you are ever in the Texas Hill Country :-)
Finally, if you are not in debt, and you don't want to add pain to your life, simply learn to be content with what you have:
Philippians 4:11 (KJV) Not that I speak in respect of want: for I have learned, in whatsoever state I am, therewith to be content.
Hebrews 13:5 (KJV) Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee.
If you want to keep your psychiatrist in good money, get into the stock market at once.
Micah 6:7 (KJV) Will the LORD be pleased with thousands of rams, or with ten thousands of rivers of oil? shall I give my firstborn for my transgression, the fruit of my body for the sin of my soul?
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