What does a casino do? How does it operate? The key to its profitability is to ensure that enough money comes in the door, stays to play, the odds are hidden, and that the house gets a small percentage of the money in play, whether the patrons win or lose.
Now let’s look at Wall Street. Think it’s different? Well look at how that system is built and operates. To be profitable, Wall Street must convince people that:
- Money management is very complicated. “Let us experts handle your money. We can do it better than you”, say Wall Street insiders. (Get money in the door.)
- The stock market is the answer when it comes to retirement and financial freedom. (Essential to keeping money coming in the door.)
- The only way to invest successfully is to invest for the long run. (Make sure the money stays to play.)
- Wall Street experts know what they’re doing. (Complete investment track records are never shared = keep your odds hidden.)
- Pay us a small percent of the money invested. (The house always wins, even if the client loses.)
Sure sounds like a casino to me. And every one of these Wall Street assertions is absolutely untrue! They are myths, spun for decades, for the sole purpose of enriching Wall Street’s financial services industry and its supporters.
Unfortunately, it’s been far too easy for consumers to buy into these myths. Starting in the mid-80s, the globalization of the economy, the dot com explosion, and 401(k) accounts going from non-existent to over 70 million accounts, all combined to fuel the greatest stock market boom in history. The industry known as “Wall Street”, and the vast majority of the financial “experts” associated with it– the stockbroker’s financial advisors, financial media people, et al—never understood that the boom was just a moment in time, one peak in the endless cycles that markets always go through. In confusion, experts mistook being in the right place at the right time with actually knowing what they were doing. For them, it really didn’t matter. By then they had created their Wall Street system.
As a Wall Street insider all though the 90′s, I witnessed this first hand. In December of ’99, I told all my clients that the stock market had become terribly overpriced and that I was selling my business and most of my own stock holdings. I advised everyone to get out of the stock market because there wasn’t any money to be made there for a long time to come. The Dow and S&P were over 150% overpriced. It was a no-brainer, and yet with rare exception, the expert stockbrokers, financial advisors, and the stars of the financial media did just the opposite, telling consumers to keep right on buying stock and to always invest for the long run.
After I left, I continued to look on in frustration as the futures of millions of hardworking Americans were in the process of being destroyed. Watching as the “experts” failed warn people not to buy a home during the worst overpricing in history, and watching millions of families lose their homes, and watching as it became clear that tens of millions of baby boomers would not be able to retire, that’s when I decided to do something about it.
I understand money. I learned what I know the hard way from over 60 years of real world trial and error, and I realized I could explain successful personal money management to anyone who cared to listen. It didn’t matter what they did or didn’t know, whether they were a PhD in economics or a high school dropout. Smart money management is something that absolutely everyone can do, provided it’s explained properly. Unfortunately, this hasn’t happened, at least not on any significant scale. So, I decided to provide the information that is needed by writing Money Smart: How to Spend, Save, Eliminate Debt, and Achieve Financial Freedom and creating a supporting website, www.MoneySmartOnline.com.
Money Smart starts by making it clear that you–and only you– must manage your money, then goes on to show you exactly how to do it–how to spend, save, invest, and achieve financial freedom. What you’ll find is that there really is a better approach to personal money management, an approach that works.
The bottom line is that it’s your money. Don’t be gamed by the old financial system. Learn what you need to know, and be in control of your finances from now on.