my first job, was on the 26th floor of the sydney stock exchange bldg, in bond street.
ive worked for stock and share brokers, merchant banks and even the local branch of SBC a Suisse bank
http://www.taxfreegold.co.uk/sbcswissbankcorporationgoldbars.html
(i still have a couple of swiss army knives with the three keys logo inlaid on them)
and i can say without any doubt, that what i saw during that time, tells me the financial system is a predator/prey model. for every winner, there is a loser.
i could see no difference when i was working at a stockbrokers, between how the "players" behaved in regards to stocks and shares, and how they behaved at the randwick racecourse, and indeed many of the chief dealers engaged in both pursuits, with the same enthusiam and tactics.
finding out AIG has 1.6 trillion in derivatives exposure, is a bit like finding out they blew that amount at the track.
and ive always had that attitude to the stock and share market, any money you spend there should be looked on like a day at the races, you might win, you might loose.
the problem is when ppl start measuring their wealth based on the "numbers" in the share portfolio, hence the expression paper millionaire
http://www.investopedia.com/terms/p/papermillionaire.asp
i like to think of "the market" as a place where the greedy stupid, are seperated from the greedy smart, along with lots of their cash.
i once watched a greedy dealer who had a packet of shares he bought for 4 dollars each, go to $16.50, then the next day drop back to 16, then 15.....other brokers got out, but not our intrepid hero, they will rally he calmly stated, while his key strokes frantically called up a refresh on prices.
some took his advice and waited, but the last of them broke when the share price hit 8.50, still our hero hung on..... they bottomed at 2 bucks each, he lost money
its all about the greed, a small profit isnt as great as a large profit, but its better than no profit. the trick is knowing when to hold em, and when to fold em, an apt parralel to draw.
though as i said the horse racing one is better.
as an investor/punter you can either go out to the physical premises of a company which you are thinking about buying shares/gambling on.
ask for a copy of any company reports, get a tour of the facility if possible and generally check out its health.
or you can rely of the advice of your broker/bookie who has done this sort of leg work in one form or another.
but either way you pay your money and take your chances and for every dollar you win, some poor slob somewhere goes home poorer. oh there is growth, and you do skim some of that legitimate "value" off the pile. but most of its funny money, bubble money inflated and filled by greed.
heres another example
was watching a british game show where the idea is to go to the flea markets, and buy antiques as cheap as you can, then resell them at auction and try and make a profit, you "win" the game if you make a profit.
and thats "Good". (shades of G.Gecko) the show is called bargain "hunt" ie predator / prey model
but if you really look at the dynamic, its everyone trying to "rip off" everyone else.
the aim of the game is to pay "less" to the person who owns the object, than you thinks its worth as an item.
if with your experience in antiques you "spot" a bargain that is an item you think is worth 100 credits with a price tag reading 20 credits, you snap it up, knowing full well the vendor is getting what you perceive to be "less" than what you think its worth.
someone wins , someone looses
true story this
was the 80's and i was eating lunch in the forecourt of the australia square bldg in sydney, suddenly a collective sigh/moan came up from the crowd of lunch eaters (to this day i cant explain how they "knew")
and we all looked up, and there was a guy in a brown 3 piece suit doing a really bad seagull impersonation, he had taken the lift to the 48th floor observation deck with a hammer in his jacket, calmly stepped out of the lift and over to the window...........
landed splat in the lane next to where i was eating, arms and legs at angles you dont often see. most remarkable of all the chalk outline and blood stains remained there for weeks until it rained
he was a stockbroker gone bust
