Stocks The Biggest Casino in Human History

As you hear the news and you might get the feeling that you are getting some part of the truth about the underlining rational why stocks go up or down.

The answer is not simple. It can be summarize in two parts one is the transfer of wealth from the poor towards those with the access to large sums of borrowing, this is a new and extremely sophisticated class warfare, that can be see as the super-wealth taking advantage of the rest of the population. Second, linked to the first is the shift of risk from government responsibilities to the unprepared workers. Pension allocations is the primary driver of stocks prices second is the speculators from hedge funds that work for all major banks.
If you pay attention fear is the number one driver of news. Second is the building on the sense of wealth by using the power of central banks to create interest rates that will re-allocate the value of assets, as the wealth effect create by home value increases, with no underlining reason other than cheap borrowing costs. The dichotomy of fear and wealth creates uncertainty and the need for personal assessment of savings and pension risks.
Imagine if two and half billion people will give you for the next thirty years the present average of $290 a year and you can keep at least .5% of that money as custodian. No a bad deal, and it gets better. It does not matter what happen to the actual returns and performance of that money your cut stays the same.

Clearly, this “all is good” creates a bias and that is to keep the money flowing and people believing the downside needs to keep growing like a pyramid scheme you need money flowing in to absorb the all those fees accumulated over the movement of the money from fund a to b and the rotation keeps the grease and those manager multimillion dollar salaries alive. If you wonder why all the financial news are biased in the optimistic the reason is simple they want your money.
If you think about why stocks should be sold above any other asset, well that is the dirty secret, they do not need, but the are enough suckers to keep the game alive, and the use of the free capital rhetoric is not other than taking the pension of other people and place it into stocks does not matter if those stocks any intrinsic worth.

I think that it will be interesting to address some of the fallacies and talking points that the talking heads use when they talk about stocks and other risk investments.

Part of the same process is the boom and boost process that occurs every four or five years in the prices of stocks and other assets as real estate. I leave that for a future commentary.

The big question is what one should do to have a more stable system. It is not hat easy anymore, but there are action that you can take and one is to find people in your community that care about their future and are concern about the risk that the present system represents.