The Ugly Truth About the Financial Sector
Wall Street can be summed up like this: it’s the ultimate wealth transfer vehicle.
Nothing is more efficient at taking money from one group of people and enriching another group, with the wealthier group providing no real value other than making themselves richer.
This goes from the creation of public companies and IPOs to the fat management commission for consistently losing out to S&P 500 ETFs. Even the 401(k) is nothing more than a redirection of billions of dollars to keep the madness going.
401(k)s provide regular buyers for the sellers (Wall Street) and commission and fees for Wall Street.
If you’re a regular, long-term investor, you’ll get the market return at best, which could be 5 to 8% after taxes.
The biased are ALWAYS up, so don’t worry. It’s actually hard to lose money in the stock market if you just buy a low-cost ETF that is tied to a major index, like the S&P 500.
Every year, they take out the weak and replace them with the growing.
Pensions, Wall Street itself, and many other large power players are tied to the stock market, so I wouldn’t bet against them. If anything, we’re going to see the Dow at 50,000, not 5,000 like we see from Internet ads trying to scare us into a newsletter subscription.
I personally own some of the large-cap stocks. I also own the Vanguard 500 fund.
The idea of owning some of the best companies in the world isn’t exactly a bad idea, however, I’m also a realist. I know that the real money is in the creation of investment products that Wall Street sells to main street.
Why go out of your way to bet against the institutions that rule the world? In my opinion, it’s a recipe for a lot of pain and poverty.
As a result, I own stocks, and I also enthusiastically invest in small start-up companies and micro-caps.
It’s with these speculations that we can get to know the people who run them and truly be rewarded as they build up their companies.
The returns from the micro-caps I’ve invested in and suggested in this letter have delivered life-changing returns, to the point that there was a long while in my life where I only owned micro-caps, gold, and cash-flowing real estate.
Today, we do suggest a deep-value blue chip from time to time, but what I really want to focus on is cash flow from sources outside of Wall Street and speculating in start-ups in any sector I think we can make money in.
Investing in trends and the right people is where we can supercharge our wealth.
That is unless you want to be rich when you’re 105 years old, in which case you can just keep plugging away at your New York Stock Exchange stocks or ETFs tied to the Dow and S&P 500.
To your wealth and financial independence!
Legal Notice: This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.