Some of you may be wondering if my thoughts were biased in some way (shame on you for thinking for yourselves). Well by the way of full disclosure, perhaps my thoughts were biased. This is because I don't have any "skin in the game." I have not invested so much as a penny in the stock market for the last four plus years. Now perhaps this was a prudent decision, in hindsight of course. So you are right, I don't care about the market perhaps as much as you - its not my money loosing value...right.
Now in my defense, I have had money in the market before, during and after the Dot Com bubble bust. I lost half the value in my portfolio.
Also, I do care about what happens on Wall Street and Main Street. I am a business student who, one day, would like to be an entrepreneur and own my own business. To entrepreneurs easy credit from Wall Street is a heaven sent, not to mention Main Street with excessive amounts of disposable income.
My stance has not changed: people make mistakes, so don't "tie the noose" yet.
Tuesday, November 18, 2008
Thursday, November 13, 2008
What Has Main Street Done For You?
Minions! Before we begin today, let us define a few things:
Main Street = the stereotypical neighborhood drive, also used as the stereotypical American working family.
Wall Street = the stereotypical securities trader (hedge fund manager, derivatives trader, etc.) but is not limited to a single exchange market (America: NYSE, NASDAQ; London: LSE; Moscow: MICEX; Korea: KRX; Hong Kong: HKEX; to name a few), also used for the stereotypical owner of company or high level executive (CEO, CFO, corporate boards, etc. ["fat wallets"]).
Let’s begin.
Other than allowing the creepy old man across the street move in, who sits on his porch all day staring at your house, what has Main Street done for you? Yeah sure, it has given you a home, a roof over your head, shelter from the cold - oh wait, I'm sorry, Wall Street did that for you. Odds are they built your home, provided the materials that keep you warm at night, they provide your electricity, offered you enough money so that you can purchase that home of yours, and the list goes on.
Minions, it’s time we to cut Wall Street a little slack. Sure, they have had their blunders; including this giant credit one (which might I add started on Main Street). We must not forget how interconnected our lives are with Wall Street, they depend on us and we depend on them. In fact, I'll give you four examples: 1) Try to find an automobile maker in the market place that is not traded on Wall Street. 2) Blogger, the blog provider of this very blog, is owned by Google - a publicly traded company with a CEO with a "fat wallet." 3) Must you forget that you have a checking account, or a savings account, or heaven forbid a 401k, IRA, or Pension Fund. Yes, my minions, you are contributing to the very fat wallets that you despise so much. 4) Perhaps a publicly traded company has been generous enough to employ you in their vast empire of money.
So why do you despise them? Is it because the entire financial market made some risky bets and now your mutual fund values are half what they used to be? Sorry, I don't know if you got the memo, but mutual funds are a giant collection of stocks. Stocks are inherently risky, that is why you invest in such a large assortment of stocks when you invest in a mutual fund - to minimize that risk. You have earned such a nice 12% yearly reward over the past one hundred years or so for one simple reason: the more risk the investment the more they have to pay you to convince you to wade in the water of risk. However, mutual funds are not 100% risk free, especially when the entire world economy goes into the crapper (as we’ve seen).
I have one more thing to say about your retirement savings in the form mutual funds, in all its many letters and numbers (including: Roth IRA's, IRA's, 401(k), 403(b), etc.): as you put money into the mutual fund you are in fact buying stocks in each of those individual companies. By doing this you are literally an owner of the company, you are now the fat wallets that benefit when the company does well.
Minions, you may live on Main Street, but you rely on Wall Street more than you know. So lets stop mudslinging and starting thinking of a fix.
Main Street = the stereotypical neighborhood drive, also used as the stereotypical American working family.
Wall Street = the stereotypical securities trader (hedge fund manager, derivatives trader, etc.) but is not limited to a single exchange market (America: NYSE, NASDAQ; London: LSE; Moscow: MICEX; Korea: KRX; Hong Kong: HKEX; to name a few), also used for the stereotypical owner of company or high level executive (CEO, CFO, corporate boards, etc. ["fat wallets"]).
Let’s begin.
Other than allowing the creepy old man across the street move in, who sits on his porch all day staring at your house, what has Main Street done for you? Yeah sure, it has given you a home, a roof over your head, shelter from the cold - oh wait, I'm sorry, Wall Street did that for you. Odds are they built your home, provided the materials that keep you warm at night, they provide your electricity, offered you enough money so that you can purchase that home of yours, and the list goes on.
Minions, it’s time we to cut Wall Street a little slack. Sure, they have had their blunders; including this giant credit one (which might I add started on Main Street). We must not forget how interconnected our lives are with Wall Street, they depend on us and we depend on them. In fact, I'll give you four examples: 1) Try to find an automobile maker in the market place that is not traded on Wall Street. 2) Blogger, the blog provider of this very blog, is owned by Google - a publicly traded company with a CEO with a "fat wallet." 3) Must you forget that you have a checking account, or a savings account, or heaven forbid a 401k, IRA, or Pension Fund. Yes, my minions, you are contributing to the very fat wallets that you despise so much. 4) Perhaps a publicly traded company has been generous enough to employ you in their vast empire of money.
So why do you despise them? Is it because the entire financial market made some risky bets and now your mutual fund values are half what they used to be? Sorry, I don't know if you got the memo, but mutual funds are a giant collection of stocks. Stocks are inherently risky, that is why you invest in such a large assortment of stocks when you invest in a mutual fund - to minimize that risk. You have earned such a nice 12% yearly reward over the past one hundred years or so for one simple reason: the more risk the investment the more they have to pay you to convince you to wade in the water of risk. However, mutual funds are not 100% risk free, especially when the entire world economy goes into the crapper (as we’ve seen).
I have one more thing to say about your retirement savings in the form mutual funds, in all its many letters and numbers (including: Roth IRA's, IRA's, 401(k), 403(b), etc.): as you put money into the mutual fund you are in fact buying stocks in each of those individual companies. By doing this you are literally an owner of the company, you are now the fat wallets that benefit when the company does well.
Minions, you may live on Main Street, but you rely on Wall Street more than you know. So lets stop mudslinging and starting thinking of a fix.
I Have Arrived
Please, do not fret; I have arrived to make your life a little less cluttered than it was the day before. Now you may enjoy one less direct human interaction, replaced by one more feed with direct computer input into your frontal lobe. From here on out I will be your voice of reason. You will no longer need to think of future consequences of your actions, for I will present them to you. Choices between good and bad options will be clear as glass, for I will choose them for you. Those who understand little of this existence, I will be your guide. Join my minions as we explain the world.
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