We are extremely fortunate to live in a time when the overlords have to steal our working lives by legal means. We are still peons but the Fat Boys have to make it look like we are free. They do this by inflating the cost of everything to the point we have to work day and night to afford it and then if we are making too much money they create an open door immigration policy. Encourage foreign real estate speculation or think up globalization where we get to compete with four billion poor people for jobs. Sure, they tell us it is for our benefit but all it does is get the tread-mill running faster. This keeps us from paying back the loans we have and creates the need for more debt to pay the interest on what we already owe.
Take the housing bubble as an example. The banks want the world to be indentured to them with a burden of debt that can never be repaid but to trap us we have to think it is our idea.
That is the only way it can be in a democratic, capitalist society where slavery is banned. It is bait and switch, taken to a new level. Why would anyone in their right mind go out and borrow half a million dollars to buy a house and then spend the next 30 years at a job, where half of every day went to pay back a bunch of fat cats their money. Money that did not even exist until they created it and said it existed?
It is the banker's big lie, it is all illusion, the interest on the mortgage would be around $466,000 over the course of the loan, making the total bill around a million not including maintenance and taxes. Nobody would put their head in that noose unless there was a reason that made it seem a logical thing to do. As human beings we have to be somewhat delusional or we would not be able to "answer the bell every round" but that kind of self abuse is beyond comprehension.
THE BIG LIE
What is the lie? It is inflation combined with margin or debt. Without it society would seize up, the whole system would collapse. The point of this article is that if we understand the reasons behind the madness we can protect ourselves and profit at the same time. Trying to guess where our economy is going next and when the game will end is fruitless. History tells us that societies have been led around by the nose since we started huddling together in caves and we are not far from the caves yet, except that now we have to pay for them.
BAITING THE TRAP
What is the bait? Margin and debt only makes sense if there is bait and that perfect bait is capital gain or profits. The futures market is a perfect example. How do the fat boys get more victims? They offer free loans. Although they are not really interest free, they only seem that way, there is usually a carrying cost built in known as contango but traders are attracted to the leverage that they offer. That leverage means bigger profits. The fat boys are there to take your orders and they do it for a reason, they want your money. Housing was the same thing, potential profit created demand, not just for housing but for the debt needed to play the game. If there were no big gains then no one would play the game.
STOCKS WORK ON FEAR AND GREED
Stocks work somewhat differently, of course there is margin debt which they receive by lending investors money against stock holdings but the Fat Boys have learned to manipulate prices to create demand or a lack of it . That is how they make a large portion of their earnings and profits each quarter.
The lower chart is of a humdrum, house building stock, now there is an industry that should be hurting but look at the blue arrows, they show points from which we launched 100% rallies or the thick end of 100%, the last one in yellow only gave 60% but you get my point. Even in a housing melt down this stock was able to double several times. The key is this, to double your money several times or even once you have to sell what you bought.
The thing we have to recognize is how fortunate we are to be able to play the game at all. No other time in history has offered us "small people" as Tony Hayward likes to think of us, a chance to become wealthy. We used to have to make something or invent something, or run a successful business, now we can simply buy something.
Here is the best part, they have to let us make profits if we know how to play their game because that is how they make their profits. They need other players or there would be no game. They rely on human emotion to make their money. We will basically screw ourselves and they know it. Here again greed for profits is the bait and all they have to do is set their computerized algorithms to fluctuate, then swing the price up and down and we shoot our toes off.
The lower chart is of a junior silver stock, again a humdrum, run of the mill company that has tripled in price twice in the last couple of years. The yellow arrow shows a 85% bounce. Notice also that we are drifting down as the price of silver trades near all time highs. I put this one in to show once again that prices fluctuate and not to pay attention to news and fundamentals. Investors that bought into the story last December are scratching their heads right now. The only thing that matters is price.
BUY LOW SELL HIGH
Don't sit on your assets, don't be paralyzed by fear, don't worry about whether we will inflate or deflate, get in the game while it is still going and know prices will fluctuate. Focus not on buy and hold which is what the Fat Boys want you to do but on managing each position so it is either profitable or it is gone. It is not that hard, I teach people to do it every day. It is simply a matter of knowing how the system works. I have posted a couple of charts of stocks that have double every year, sometimes more often. These are not recommendations or good companies nor are they exceptions, there are hundreds of them. The key is to remember timing is everything, you can't buy into some fundamental bunch of B.S. If you do you will be buying into what someone else wants you to know and probably not what you need to know. If you are an investor you probably have already noticed that the news has nothing to do with stock prices. They fluctuate and if they don't fluctuate don't trust them.
Concentrate you energy not on finding the next great company or studying the entrails of the economy but on learning to capture the fluctuations of the also-rans. Understand that the markets are manipulated. Take the emotion right out of the equation, everytime you open your wallet.
If you do not manage your own money, then make sure the person that does understands these simple concepts. Most money managers buy high and rely on inflation to cover their mistakes. If your account is not growing then that is the reason. Get a new advisor, buy and hold is not going to save our assets this time.
We are all gamers now.
