Remember back in early October, when I begged you to get out of the market? Charts, yes charts told me that there was no going back to Dow 14K. Trendline broken. Case closed. Well, CNBC paraded expert after expert, even Warren Buffet, to tell you to stay in. Don”t sell. Expert after expert telling you it’’s “time to buy”.
Today is November 20, 2008. The scam of short selling has moved into high gear. Citibank, a $ 50. stock a year and a half ago, closed below 7 bucks. Companies throughout the spectrum of public trading are being raided by wall street traders for their stock equity. The problem is you”ve been sucked into buying these stocks with your hard earned retirement dollars. And now your retirement dollars are almost cut in half.
Where did your dollars go? Did they disappear? Unfortunetly, no they didn”t. Your retirement account value went from your account into the accounts of traders on Wall Street. And they continue to do so. While everyone on television gives the old sad face, “wow, losses everywhere” speech, just remember, for every loser on Wall Street, there’’s a winner. Short traders have coalesced together, combining forces to literally steal company equity-which is your money.
The unspoken scam, in my opinion, is that CNBC does little to nothing to actually tell you how your losing your retirement dollars. It’’s almost surreal to watch the train wreck of retirement accounts-watch how Wall Street has used the media to convince you that what’’s happening is not traders taking your money, but rather, “a bad economy”, “bad mortgages”, etc., etc.
In my book, “If Everyone Were Rich, who would make me dinner?”, I explain this concept in very simple but understandable terms. A short seller is a trader that borrows a stock-he never owns it. He borrows the stock, sells it (with the promise to return the stock later. The later date of returning the stock is undetermined. A short seller can return the stock 10 years later, as long as the seller can cover the purchase of the stock at the later date. Anyway, when a short seller sells the stock, he gets the cash (your money). The short seller continues this process, over and over again, along with other short sellers, who combined, create the negative price movement (falling stock price) and thus the removal of equity (the loss of your money) in the market. When the stock price falls to it’’s targeted low price, the short sellers quietly move in to buy back the stock from an exhausted, hopeless public (who have no idea what actually happened). The short seller buys back the stock at the low price (he covers his bet), and the transaction, or theft of your money is complete.
For those that argue vociferously that short selling “provides liquidity to the market”, you”ve missed the boat. The “liquidity” or cash-is provided to the short seller. How does providing the short seller- the guy who didn”t own your stock but was able to sell it anyway for the sole purpose of taking the value of your money-benefit anyone but the short seller himself? When the supply of any commodity-in this case a stock-increases, and demand for any commodity-in this case-a stock, stays the same-the price must fall. It has to. The problem is that this act-the act of short selling-is an artificial manipulation of the laws of supply and demand. It’’s a fraud.
Financial advisors defend this wall street trading concept with a vengeance. I”ve been ridiculed by advisors who insist there’’s nothing wrong with the practice of short selling. Just because the result of a stock market that turns to short selling as it’’s focus ultimately ends up with you losing your retirement funds somehow does not seem important to many financial advisors.
Short selling is not a bad thing if the very people who fund the stock market-worker’’s stock purchases-actually knew that short selling exists, what short selling does, and the true risk associated with investing. Don”t buy the old “it always comes back” line from the folks who try to reassure you when your pocket is being picked. Remember, the Nasdaq lost 80% of it’’s value by the end of 2001, and it still hasn”t come back. That’’s 7 years, and you”re still screwed.
The bottom line is, no matter how many different ways CNBC spins it, no matter how many “experts” are paraded in front of the television, no matter how many “experts” are quoted in the newspapers-who all say “it’’s the right time to buy”, and “the market always comes back”, the facts remain the same-you”ve lost 40+ % of your retirement account. No matter what they say, your pocket has still been picked.
From my account, 28 trillion dollars have moved from our retirement accounts into the wall street trader’’s accounts in the past year. I”d have to opine that we are witnessing the greatest heist, or transfer of wealth, from the working class to the wealthy-in our history.
