We start off the month of April with a thought-provoking book by T.E. Scott. In The Losing Game: Why You Can't Beat Wall Street, Scott exposes the stock market and commodity markets for what he believes they really are --- brilliantly marketed rip-offs. He says, "Wall Street is fleecing millions of Americans every day with brokerage houses, Congress and the media as willing accomplices. With their help, the American public is fooled into thinking that investing is safe and convinced that, if they’re smart and listen to the right people, they can accumulate wealth quickly. And when we fail, our tax money bails them out."
For today's guest article, I asked the author the follwing question: I am an investor who has seen both profits and losses while investing in Wall Street, but who still believes in the system. What will I find in your book that will change my mind?
Here is what Scott had to say:
What you will find in The Losing Game is that you are looking at Wall Street with what we refer to as an “Eagle’s Eye” view of the markets. You are focused on your specific outcome in the market, and that prevents you (and others) from looking at the system as a whole. This is part of the overall marketing plan of Wall Street, to distract you from the real functions of their business plan.
The Losing Game makes a strong correlation between investing in Wall Street and gambling. If you look at Wall Street as a casino, and your friend won money at a slot machine, would you logically pour all of your money in that same machine expecting the same results? Ultimately, when you are involved in the market, you are trying to predict an unpredictable. If you think you can predict a non-predictable, our advice is to go to Vegas, you’ll have more fun.
The Losing Game points out that the negative cash flow of investors’ money is far greater than the positive cash flow of investors’ money. Investors as a whole are losing billions of dollars a day, and this was before the financial crisis started. No matter how you look at it, the losers in the market support the winners on Wall Street. If you make any money, it comes from one or more investors, which makes it a zero-sum game. And when you add in expenses and fees, it becomes a minus-sum game.
Our question to readers of The Losing Game is this: How can you trust a system that has no real accountability or transparency? The book lays out the argument that the regulatory agencies like the Securities and Exchange Commission are not designed to protect the investor from Wall Street, they are designed to protect Wall Street from the investors. That’s why Bernie Madoff was investigated eight times in 16 years by the SEC with no action taken. As long as Madoff was paying his investors, there was no reason for the SEC to intervene, even if they had reports that Madoff was running a ponzi scheme.
You have to have blind-faith to believe in the system, because Congress or the SEC does not require financial reports tracking investor money. Seriously. If you were to ask your broker or financial advisor for a report detailing how many of his clients have made money, and how many have lost money, and how much, he would tell you that this information is not kept, and not required to report.
That’s why you have to be extremely skeptical about any statistics. Experts will tell you that the market has grown 10% a year over the past 50 years, but what they don't tell you is that those are "listed" companies on the NYSE. If you were to factor the companies that have gone out of business and have been delisted, that number would be lower, and possibly a negative number. It's all part of the marketing plan.
Remember this, Wall Street does not care whether you make money or lose money in the market, only that you keep your money in circulation in the market. That way, the brokers and exchanges make their cut with every transaction.
THE LOSING GAME VIRTUAL BLOG TOUR '09 will officially begin on April 1 and end on April 30. You can visit the authors' blog stops at www.virtualbooktours.wordpress.com in April to find out more about these talented authora!
As a special promotion for all our authors, Pump Up Your Book Promotion is giving away a FREE virtual book tour to a published author or a $50 Amazon gift certificate to those not published who comments on our authors' blog stops. More prizes will be announced as they become available.