Investors are exactly like gamblers. Traders are more aggressive gamblers. The odds of losing are always against the gambler. And like the gambler, the investors do not have a shiny crystal ball to look into the future and predict the outcome of any event. Therefore, the stock market is notoriously unpredictable and likewise has higher risks than gambling.
The risk is the unknown status of either gaining or losing money than the original amount by both types of investors: gamblers and traders. I use the word ‘investors’ loosely to describe how gamblers and traders alike use any means to get rich quick to have any eye candy in their possession and not necessarily own anything of value. Either way, there are rewards or consequences.
Although my knowledge is very basic of how our current financial system works, below is a very simplified visual of how maxing out house equity from real estate investments, for example, has no net worth:
+ $200,000.00 Capital gain (from house sold five years later)
– $180,000.00 Interest only (paid at $3,000.00 per month for five years)
= $20,000.00 Net gain (after living by each paychecks for five years)
– $120,000.00 Monthly expenses (of utilities, insurances, fun, etc. for five years)
=$<100,000.00> Net loss (with no emergency cash whatsoever)
By the way, the above scenario does not include taxes on salary and wages, capital gain on investments, interest and dividends and other sources of income, like unemployment benefits and child support. Using this math may be useful to those people, who are unable to understand the language of any mortgage, which is basically a very, very expensive loan.
Other unforeseen events, like the real estate market bottoming out due to defaults (or past due payments) on sub-prime mortgages and not being able to sell the house right away for more cash to cover an already mounting debt of death and like the jobless person staying at home due to an accident or some disability and with unpaid hospital bills, are not calculated into my fine example of how to get poor fast.
Like plasma, which is an ionized gas that contains suspended blood cells, there is no way to beat the market. The rich seems to get richer with the wealthy getting sucked into this free ride made on the shoulders of the poor and middle classes. The illusion has been to entice the greedy to ‘invest’ their hard earned cash into endeavors ranging from conservative to speculative. Like the hot air from those earning reports produced by companies and all those confusing formulas by managers of funds, there is always a potential sucker to fool by instilling into their minds the false hopes of getting rich. There are those who maxed out margin loans, too.
Like the red blood cells, which transport oxygen into the tissues of the body, there is no way to let money earn for itself. With is the most liquid form of currency, such as banknotes and coins, cash (or money) circulates through the market of buyers and sellers for goods and services. Liquidity means transacting money faster and without credit. Those who don’t have cash maxed out on credit cards and lines of credit. This means the debtor ends up either working hard honestly to earn money forever or from borrowing loans via family and friends (who act like banks) to harming or killing another caught in the cross fire.
Like the white blood cells, which fight off diseases of the body, there is no way to beat the regulating laws of the lands. For example, some people (i.e. the poor) continue to pay off the cycle of endless debt with other credit knowing full well that paying back cash (from paychecks earned around minimum wage) would never made possible unless some sheer luck or divine intervention happens to materialize in the form of money. This is how the poor gets poorer. They are charged higher interest rates on any loan due being higher risk groups and get dumped into jail for defaulting (or not keeping up with the payments) with foreclosure and seizure of property as justice to the creditors.
Like the platelets, which act like patches to clot the blood, the Federal Reserve (or the Feds from New York) injected cash into the market today to help the financial market and allay the fears of investors in the credit markets. The addition of $19 billion in the morning, then $13 billion and $3 billion later on, in liquidity is an attempt to stop the bleeding. This bleeding means the Feds are losing money by the bulk of the mostly poor at the bottom of the pyramid. The temporary effects will only force the Feds to cut the federal funds rate, which would further weaken the already hungry eyeball at the top of the pyramid. The next meeting to discuss this inflation is due in September or sooner.
Perhaps the Feds should stop the practice of usury by lending at high interest and the print of money (funny or blood) out of thin air and go back to the gold standard or some ‘cashless’ standard that does not promote criminal activities. These ‘pieces of paper’ are notes (look for the word ‘note’ on the top of each bill) and are in fact backed by nothing (but stinky smelly air produced by those with pig-like snouts). Furthermore, the funds by foreign investors are also spelled out on ‘pieces of paper’ and have been frozen today, for example, by BNP Paribas in France, which invested in U.S. sub-prime mortgages.
I personally do not like handling banknotes or coins. Someone with a contagious disease might have held, coughed or sneezed on those filthy, dirty monies. My preference happens to be in the shape of any traditional card measuring in the size of 3.375 inches by 2.125 inches. Moreover, I personally prefer not to be in debt to anyone. For those who need in need of spiritual guidance, you may want to refer to the Biblical passage under Romans 13:8a, “Owe no one anything, except to love each other.”
While on this subject, giving ten percent or donating money for free to any representative of ‘God’ is ridiculous. There is no salvation or free entry into heaven for giving up money created by mere mortals from the third dimension to an immortal. Churches in the name of religion are automatically qualified to receive tax-deductible contributions through the 501c-3 status and are active participants of this hush money.
If any investor, gambler or trader lost anything due to greed (one of the cardinal sins, of course), learn to forgive yourselves and move on with nothing but your souls. With a bit of dry humor to lighten this already long article, perhaps for those who have hit rock bottom and are willing to sell their very souls I am sure there is long line waiting for them somewhere in a bottomless pit. There probably is a lay away plan that may include your body parts or first born, too: The end.
Copyright © 2007 by Fluffy von der Flynn. All rights reserved.