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How to avoid committing financial suicide in today's economic climate
Because of the various financial and economic crisis around the world investors have decided to sit on the sidelines and collect 1% or less on their money markets and bonds. What investors fail to understand is by the time you subtract out taxes, economic inflation (which is more than the 1% the government is claiming) and management fees your committing financial suicide. Your loosing significant purchasing power with your money. How much could you be losing year over year? What could you be doing to stay on top of your investments?
shawn disney 10+
shawn disney 10+
It also strange that you consider that it is the "government" which is facilitating Bailouts, and other distorting actions on the helpless "Market". Have you not noticed the large, and constant," revolving door" effect, where Wall St. execs, after retiring from GS, immediately "BECOME the government, in some mysterious way? I mean the advisors to the President, the members of the Fed (effectively the "ogvernment"), etc.? The money power has corrupted our government, perhaps beyond repair. This is not an accident, only an accident waiting to happen.
shawn disney 10+
Krisztián Pintér 200+
any investor that could not see through a few layers of embedded securities like a CDO is a joker, does not worth the label of investor. it is not more than common sense. do you buy a paper because others do? do you buy a paper because some company labeled it AAA? if so, i have no sympathy for you. so the actual problem is not the creation of such instruments, and not the lack of regulations. the true problem is the total lack of personal responsibility and accountability, and it is exactly caused by regulations.
such schemes do hurt ordinary investors. such schemes suck up some money, and since it is scarce, less money is available to normal businesses. but fraudulent schemes pop in a short timespan. it is like a sickness, which is cured by the immune system. but this time, the pyramid scheme was run by the government and with the support of the government. that's why it lasted so long.
such schemes do hurt ordinary business, so they can't wait for the fraudsters to finally pop, and the truly profitable businesses can get capital again. so does the government help that? does the government facilitate the elimination of bad apples? no, actually the opposite. they bail them out. have they bulldozed freddie and fannie to the scrapheap? do you see a massive wave of bankruptcy on the wall street? nope. they get new money, and now the government is about to extend its intervention to the housing market. these jokers will receive even more money, and they will continue to even more hinder ordinary businesses.
final note: where did i claim that leaders of goldman merely providing for their family? i don't really like when someone distort my words.
shawn disney 10+
Another very great factor in the general decline is the Fact of our emulaltion of the British Empire, updated, including its decline due to completely reckless military spending, on many useless wars over a long time period. It was not useless, of course , to those corporations participating, but it did cut the ground out beneath their feet, as an empire. Another whole facet of the economy is the debt based, banker friendly monetary system , warping the whole society since at least the Civil War.
Krisztián Pintér 200+
1. you say that financial operations grant more profit. yet the question was exactly why they do that now, when it does not generate profit at all. why they don't move capital to less productive, but productive enterprises, like actual production?
2. you seem to imply that selfish people can cause damage to others, but it is not clear how. unless they also commit crimes, i don't see how selfishness would hurt anyone else. and if it is a crime, maybe we just want to fight that?
3. the very claim that investors abandoned the real economy for speculation, seems to be unjustified. we have lot of products around us, the shopping malls are full, walmart does not fear bankruptcy, and bulk carriers still cruise the oceans. it seems that these speculative institutions sit on top of real business. you can track back each security to its basis, which will be mortgage, stock, real estate or something like that.
4. the randian selfishness means nothing like exploiting loopholes and such. if a guy only cares about providing for his family, it is the selfishness rand talks about. but i don't see how such a thinking could be considered careless or wrong. it is pretty much common and accepted. equating this with the image of the evil corporate figure is unwarranted.
Krisztián Pintér 200+
Jedrek Stepien 10+
I don't think investors are seeking more volatility right now, rather the opposite.
Krisztián Pintér 200+
the very job of an investor is to find investment opportunities. if they don't want to do that, they can quit, and join me up here.
in particular, risk management is part of their job. hedge, buy cds, etc etc. if an economy can make 10% annually in real terms, there is no excuse for an investor to make any less.
Jedrek Stepien 10+
I think there are certain institutional problems. If they were fair, transparent and fully efficient markets then you are absolutely right Krisztian, but i am affraid they are not.
Krisztián Pintér 200+
Jedrek Stepien 10+
Security first. Then when sunshine comes again, those who lost only 1% will quickly make up the loss.
It is not my strategy by the way - I am young and if I lose my last shirt nothing bad happens - I'm taking a night shift :)
Ed Butowsky