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Retirement is the main reason most people invest in the stock market. The government plan here for retirement, social security, is just plain inadequate. The problem is, the market is a rip off.
Whether people invest or speculate in stocks, they are gambling in a zero sum game run by experts who know how to rig the game in favor of the house. I am not sure most Americans know this.
As a day trader, I am able to glean a few bucks from trading stocks but those are the crumbs that fall from the table of the big boys, the market makers, the ones who call all the shots and control the ebb and flow of the trillions of dollars out there. To call this “investing” is a huge scam played on the working people by the ones who own the tools that shape the markets.
So what can anyone do to preserve or grow capital for retirement? Real estate? That is also gambling. As a way to grow wealth, it also requires market timing. There is not enough of it anyway for everyone to utilize.
The bottom line is that it seems that everything is a zero sum game. As in nature where we see life feeding on life, the economic world consists of hunters and prey. Here in the States, we have some super hunters called Republicans who would love to do away with social security and privatize EVERYTHING thereby forcing more money into the rigged market games.
Edited on Aug 20, 2008 13:45
Edited on Aug 20, 2008 13:53
Edited on Aug 20, 2008 13:55
My husband can go on for hours and hours about how the stock market is rigged, has always been rigged, and how Americans are just too dumb to figure out that they’re being had every minute of every day. He’s NOT American, so he feels he has the right to tell me how corrupt our gov’t is (well, it IS!) how Wall Street is really where the planes should’ve plunged on 9/11, and how he would never in a gazillion years put one cent into the stock market. After the dot-com scandal I think he may be right. My mother never invested one cent in the stock market either, but made a killing in real estate. She always told me if you can’t walk on your investment, or hold it in your hand, it isn’t worth the paper it’s printed on. I don’t invest in the market either, was brought up to believe it was only for the super rich to make money off the little guys, so I invested heavily in other commodities such as art and gold, and of course real estate, just like my mama taught me.
I also trade regularly and have made some very nice crumbs over the years… But I do empathize with you. The concept of ‘capitalism’ and a ‘free market’ is talked about but is there really such a thing? Does the US have a ‘free market’?
If the financial markets were truly free markets, then Long Term Capital Management and Bear Stearns should have been allowed to crash and burn. And Fannie Mae, Ginnie Mae should also be allowed to crash and burn.
There should be no Working Group on Financial Markets or Plunge Protection Team or any other way that the government can intervene, manipulate or support the market which they do regularly. They talk of maintaining the ‘integrity of the market’ but the fact of the matter is that if they are manipulating the market – there is no market integrity.
Nobody will come to your rescue if you make stupid financial decisions or spend far more than you make so why should you have to cough up your hard earned money and help other people who have screwed up? Let them fail!
However, the theory of zero-sum describes a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.
This might accurately describe a number of speculative financial transactions but how on earth could that describe real estate?
Scott Oliver – Founder
WeLoveCostRica.comMost real estate transactions are speculative simply due to the nature of modern markets. I bought land in CR for a place to build a home. Whether it is my intention that the deal was speculative on my part doesn’t matter. The land will either appreciate or depreciate in value over time and, therefor, fall under the zero sum game.
the profit margin of any real estate transaction after other incidentals is the difference between the original price the seller paid and the the higher price the buyer paid to the seller. The piece of real estate did not grow in size or change in any appreciable way so the profit amount was simply a transfer of wealth from one pocket to another.
Bartering animals or food or some other commodity OF EQUAL VALUE for land, assuming standards of valuation are in place, would be the only way to have a real estate transaction which is NOT a zero sum game. Anything which is not barter for equal value is zero sum because it will involve the transfer of wealth from one hand to another.
Workers who create articles or services of value with their hands or minds
can exchange them for other articles and services they need using the currency in play. No transfer of excess wealth would have occurred as long as fair valuation standards exist. The problem lies in the last bit which has been manipulated since the beginning, That is where profit comes from. Profit is the exploitation of one man or many by another.Edited on Aug 20, 2008 15:01
Edited on Aug 20, 2008 15:08
The government bailouts are like potato chips, you can’t have just one. I agree “let them fail!” Then we will have a free market and opportunities will present themselves.
As far as zero-sum there is always opportunity and the pie is always increasing, even in real estate.
Roark, where are they creating new land? As far as I know, land mass is shrinking as the ocean rises.
The only way the pie increases in other commodities and services is by the labor of workers. Much of that increase is taken from dwindling planet resources so the pie is shrinking there as well.
The fact is that there is no free market functioning at present and there is a shrinking world filling up with more and more people every day. Even if your free wheeling ideas were based in reality, which they definitely are NOT, they would be immoral since they imply the complete destruction of habitat.Land is not being created. Real estate investment opportunity is expanding. When someone develops the land he creates or expands opportunity to invest, such as condos, that were not there in the first place. I don’t have the time or inclination to buy, develop and improve the land, but I am certainly interested in an investment of such a condo or new real estate that has been created by such a developer. The developer has expanded the real estate investment pie without creating new land.
Thank you for making my point for me. Any added value to real estate such as the construction of a condo is merely the transfer of wealth from one place to another. The construction materials and labor for the construction are extracted from somewhere else at one price and put into the land. The developer then sells the finished product at a higher price to the buyer. That transfer of the difference in price is wealth from buyer to developer and is the zero sum transaction.
There is no mana falling from the heavens. This planet is finite. The idea that we can just consume our rear ends off till the end of time and never run out of stuff is absurd. This is a closed system. New wealth is an illusion. We are just recycling the same old same old.
Edited on Aug 20, 2008 18:21
Edited on Aug 20, 2008 18:22
Then we better close down the patent office because all inventions that could be invented have been invented. The fact is Sprite, wealth was created in our scenario. Mana did not fall from the sky, the mana was created. It is not zero-sum or win-lose, it is called free enterprise, capitalism at its best. Everyone through the process won. If not who lost? Who ended up with zero?
“Who ended up with zero?” Are you serious? If you are, then you haven’t paid any attention to what has been going on around you and far away. Take a guess at how many children die each day from malnutrition and disease.
Let me try again and make this as simple as possible. The planet is finite. There is nothing we can invent or produce that does NOT come from this finite basket of resources.
Every thing is recycled or used in a way that changes it substantially. We can maximize the extent these limited resources can be used to our benefit, but even that has limits.Experts have estimated that the planet cannot sustain a population greater than between 7 billion and 14 billion people. We are approaching 7 billion quickly.
“Children die each day from malnutrition and disease” not from limited resources but for the lack of free markets. It’s those who get in the way of free markets that cause these problems. Robert Mugabe comes to mind. Once the bread basket of Africa now a country of corruption and starvation.
I do agree with you though that the planet is finite. But that doesn’t mean opportunity is, and I thought that is what we were talking about. By the way, to get back to the point of your post who are the “crooks” that you are refering to.
free markets? like what exists between Canada and the United States (free trade in theory only)? If I am not mistaken many agricultural subsidies exist in the US for wheat, tobacco, corn, etc, what is free about that? The existence of these ‘free market’ products are really hurting other countries that either don’t subsidize, or can’t afford the same level of subsidy that the US federal government provides. If this is not the case please tell me how it really works…
I agree ecotonecons, there is nothing “free about that.” This shouldn’t be going on at all. Our markets have shackles on them, they need to be taken off so that we can have access to more, creating more opportunity.
You cannot have totally free markets. There is a good reason they don’t exist anywhere. Markets are the direct result of corporate activity. Corporations exist only for economic profit and only sometimes have a weak, ancillary interest in public welfare and only when that welfare affects the bottom line.
Left unchecked, which is the direction the U.S. has been going for a long time, corporations consume resources and concentrate wealth into the hands of a controlling minority. Those in that controlling minority are the crooks I refer to above.
The “shackles” on markets you refer to are weak, mostly ineffectual attempts at regulatory checks to keep the psychotic corporate monsters from devastating the populations they reign over presently.
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