Sunday, January 6, 2013
Tony Chou
As we all should know, the stock markets are a zero sum game. That means, for every dollar made in the financial markets, some one else loses a dollar. It’s a simple concept, but the more you think about it, the more depressing the whole picture gets. There are pro investors who are making millions and billions of dollars a year. And then, there are those millions of suckers in the market, each with a couple of thousand dollars to play with, each hoping to make a killing. You have to wonder, who’s going to make money off the other person? George Soros or your grandmother? Let’s assume that the average investor loses $2000 on one investment, and George Soros made $2 billion on that investment. So that means, a million people just lost a decent chunk of money.
Subscribe to:
Post Comments (Atom)
Financial Problems in America
ReplyDeleteby Tony Chou
Business Insider
http://www.businessinsider.com/financial-problems-in-america-2011-8
There are simply too many financial problems in America. One of the big ones is that mom and pop are consistently taken to the financial slaughter house by Wall Street. Here’s how those Wall Street money men do it.
ReplyDeleteThey tell the average American that the financial markets are a pool of easy money, where anyone with some capital can make money out of. They say that even unsophisticated investors can make excellent investment returns each year, just by monitoring their stock portfolio for 20 minutes a day. They advise pensioners to put all their money into buying God-knows-what sort of financial products. And this is exactly where the problem lies. Honest, hard working people are putting their money into the stock market, thinking they can make some easy money! Hard working people are being conned into investing their life savings into the financial markets, hoping that they’ll build up a decent sized nest egg for retirement.
The truth hurts, because there is no such thing as easy money. As we all should know, the stock markets are a zero sum game. That means, for every dollar made in the financial markets, some one else loses a dollar. It’s a simple concept, but the more you think about it, the more depressing the whole picture gets. There are pro investors who are making millions and billions of dollars a year. And then, there are those millions of suckers in the market, each with a couple of thousand dollars to play with, each hoping to make a killing. You have to wonder, who’s going to make money off the other person? George Soros or your grandmother? Let’s assume that the average investor loses $2000 on one investment, and George Soros made $2 billion on that investment. So that means, a million people just lost a decent chunk of money.
So my point is, investors who are not full time investors simply cannot win at this game. It’s like asking your kid brother to get slaughtered by Lionel Messi at soccer. Mom and pop are better off investing in someone else’s investment fund. But then again, they have no knowledge of how to distinguish a good investment fund fro m the frauds that promise outsized returns every year.
In other words, the financial problems in America are indeed very severe. If the average worker tries to do any investements, sooner or later he or she is going to get taken to the finanial cleaners. And if they just keep all of their money in cash, inflation is going to have some serious damage on that money. It’s a lose-lose situation for the average person in America.