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Post by kathaksung on Mar 18, 2006 19:55:59 GMT -6
1. Winner's gain is from loser's.
A farmer planted a seed. He sold the fruit The famer created a wealth. A worker produced a car. He sold the car. He creates a wealth.
Investor A bought one hundred shares at 1.00/share. The company got one hundred dollars to pay rent, wage and material. Then the stock market rose to peak. Investor A sold the share at 1.10/share to investor B. A got 110 dollars. He made a 10% profit. But was that 10 dollars created? No. it was B's loss. When B bought the stock from A, he became a potential loser. What he bought was only a piece of paper. He couldn't cash the stock with the company which issued it. What B can do is hoping some one else to take over the potential loss.
Situation 1. If the stock is Enron, then when it went bankruptcy, B's stock worth nothing. Here Company got 100 dollars. A got 10 dollars. B is the loser. He lost 110 dollars. Winners' money is from loser's. It's evidenct.
Situation 2. If the stock is HP, then in trough, the share price may fall to 0.90/share. B sold it to C. B lost 20 dollars. C paid 90 dollars for 100 shares. C sold the stock in peak 2 at 1.20/share to D. Now D becomes a potential loser. If nobody has the will to buy his paper, then the stock worth zero. Now let's see, company got 100 dollars. A sold stock at 1.10/share. he made 10 dollars. B bought at 1.10/share, sold at 0.90/share. B lost 20 dollars. C bought at 0.90/share and sold at 1.20/share. C won 30 dollars. 10(A) + 30(C) + 100 (company) = 20(B loss) + 120 (D's potential loss)
The eqation: Winner's gain(profit) + Capital gain (Company issue the stock) = Losers' loss (loss) + Potential loss (Amount paid by the latest stock holder)
You can see there is no wealth created. How much winner got is how much loser and potential loser lost. And it doesn't include administration fee. (it's about 2 trillion in 10 years period, Re: San Jose Mercury News, 12/17/04) So when Bush say you may get better income in stock market, there must be some people bear the loss for the winner's gain. Whom do you think will be the loser and winner?
(I omit the dividend here. it's similar to interest paid by bank.)
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Post by unlawflcombatnt on Mar 20, 2006 3:00:18 GMT -6
Kathaksung,
Good analysis. That's one of many reasons I'm not invested in the stock market. And I think it's all going to collapse again. And most everyone will lose money, especially the smallest investors who don't have immediate access to the latest information. Many lost nearly all they had in 2001, just as they had in 1929 (though a smaller percentage of people owned stocks in 1929).
unlawflcombatnt
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Post by graybeard on Mar 23, 2006 7:40:17 GMT -6
I have some IRA money in stocks, and some managed IRA money in a conservative mix of stocks and bonds. How can I protect that money without withdrawing from the IRA and paying a tax lump?
If I withdraw it all at once, taxes will eat a big chunk, meaning I lose even if the market doesn't tank. GB
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Post by kathaksung on Mar 23, 2006 10:39:44 GMT -6
Since the financial market is manipulated by the financial group, it's hard to find a secure bunker. They can change government policy which will benefit the interest group. The public are always the losers. I think there will be an economic crisis in near future when the housing bubble breaks off. For it, the financial group made government passed new severe bankrupcy law last year. They had prepared to protect themselves.
2. Stock is no other than a piece of paper
The value of stock market is supported by continue coming of investment fund. One thing you should know the people who hold the stock is no other then hold a piece of paper. That's a bubble. When no money came, then the bubble will break up.
When you deposit 100 dollars in the bank, you are guaranteed to get that deposit back, plus interest.
When you buy one hundred dollars of shares of a company, you are told you probably get some dividend sometime if business is good. The dividend is not guaranteed. And you can not cash the stock with the company. Because they have spent it to pay rent, wage and equipment already. If you liquidate the company, most time you may get a negative asset. e.g. if it's Microsoft, what they left for you is a program of Windows. UA may have some airplanes. But they always come with a huge debt. What kind of asset do Kodak and McDonald have for the stock they issued? What you hold finally could be a piece of paper. What you hope is someone else would buy that paper from you to take over your potential loss. When people put all their retirement fund in stock market, they are sitting on a big bubble. All they hold is a bunch of paper. One day when people wake up and refuse to behave like a fool, then there will be a collapse of stock market.
What Bush does is to persuade people put their retirement fund into the market to take over the hot potatoes.
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Post by unlawflcombatnt on Mar 23, 2006 17:07:42 GMT -6
I have some IRA money in stocks, and some managed IRA money in a conservative mix of stocks and bonds. How can I protect that money without withdrawing from the IRA and paying a tax lump? If I withdraw it all at once, taxes will eat a big chunk, meaning I lose even if the market doesn't tank. GB I have a couple of points I'd make here. Before making them, however, I need to make it clear that I am not an investment adviser, nor do I play one on TV, nor do I even claim to be very knowledgeable here. That being said, I'll can offer my unqualified opinion. You can convert your entire IRA into gold bullion. I know this because I've done so myself. You'll receive 0 dividends on gold or precious metals, however, if that's a concern. It's probably worth finding out how much money you'll lose by withdrawing your money from your IRA and investing it yourself. The amount of money I lost in the crash of 2001 was huge compared to any penalties and taxes I would have paid had I withdrawn my money. So it's worth weighing the money you lose from early withdrawal vs. potential loss of a stock market crash. Back to the gold/precious metal investment. If you do go this route, the financial company holding your gold usually doesn't actually have the gold in their possession. You'll simply have a claim on the gold. So you still run some risk that the gold, just like your stock value, won't be there when you try to get hold of it. Though I don't know this for sure, I assume that if the investment company goes under, your gold would go with it. It's certainly better to have actual gold coins in your possession, than to have a brokerage firm "holding" them for you. I have an IRA account myself that is entirely in Gold coins. I'm weighing whether or not to pull my gold out and pay the penalties, or just leave it there. I demanded delivery of gold from this very same company for gold not in my IRA account. It took over a month to get it, and they did everything possible to delay delivery. They claimed they needed some time to "convert" the gold into coins. What they actually had to do is go out and buy the gold that they should have already had. In other words, they had taken my money simply as a claim on a certain quantity of gold, instead of actually buying it. In the future I will forego the comparatively small tax reduction received by sending a much larger check to a Wall Street investment company. Saving $2,000 in taxes is not worth giving $10,000 to Wall Street for a dubious investment. Wall Street will have to get it's Corporate Welfare from someone else.
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Post by kathaksung on Apr 3, 2006 12:25:22 GMT -6
There will be a high inflation in near future. So gold is a good choice right now.
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3. The stock price depends on the amount of investment fund.
If monthly trade stock is 100 shares, ($1.00 each) the investment fund in that month is $110, then the share price will be 1.10 each, it's a 10% rising market. If there is only $90 fund go into the market, then the price will be $0.90 each. A falling of 10%.
More fund is needed to support a growing up market. For decades, the index of US stock market went upwards. It created a fake phenominon that if you invest in long term, (e.g. 40 years) you got a good return. That's the justification someone like Bush used.
But if you know the above principle(a rising market depends on increasing investment fund) you must know that it was built up artificially. The US stock market growing up at public's pension fund. At first, Different pension fund push up the stock market. Then financial group created mutual fund in 1970s(?) which put your savings into the stock market. When it was not enough they invented "IRA" in 1980s which push another amount of retirement fund into the stock market. Further more, in 1990s, government allowed 401(k) to access the stock market. Wave after wave, Americans' retirement money were pushed into that gambling market. It became a big bubble.
But money was harvested by company and winners already. What public held are only a bunch of papers. When people want to cash their 40 years long savings, (they think they have a bunch of treasures, but that's only a paper value) Who has the ability to take over that big bubble? It needs a lot of new investment fund to support it.
That's why when government exhausted your money by "pension fund investment", "IRA", "401(k)" the last exit is your social security
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Post by unlawflcombatnt on Apr 3, 2006 12:59:32 GMT -6
Kathaksung,
Interesting observations. From what you've described, almost every decade the stock market has found an additional source of funding (and overvaluation). Privatization of Social Security is the next planned "subsidy" for the stock market.
Interestingly enough, I heard a Republican Congressman talking about a plan where parents can start putting money in the stock market for their children's savings as soon as they are born! Talk about "creative" financing of the stock market.
Instead of the so-called "cradle-to-grave" social welfare system the Right-Wingers have always whined about, we'll have a "cradle-to-grave" Corporate Welfare system that Right-Wingers will be ecstatic about.
This is a new, "improved" way to extract wealth from the middle class. Give middle class taxpayers a minuscule tax deduction for their "charitable" contributions to Wall Street. And better yet, start those "contributions" before people are even old enough to pay taxes, by allowing parents to make the contributions for them.
What a great country we live in, where everyone has "opportunity." Opportunity, that is, to help the rich get even richer.
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Post by lc on Apr 3, 2006 13:33:57 GMT -6
kathaksung, you are absolutely correct. I have been thinking along those exact lines for quite a while. Which is the prime reason why I would do all I could to resist any political argument for privatizing SS.
It should be pretty obvious to anyone who is paying attention that the stock market has lost at least 22% in inflation adjusted dollars in the last 5 years. And that occurred while there was a giagantic liquidity bubble seeking any safe haven for investment.
People and esp the press should be asking the question "why are investment dollars fleeing the stock market?".
Even more striking, why are hyperinflated real estate, dubious hedge funds and derivatives becoming the investment refuge for tens of trillions of dollars while the stock market can't even maintain it's inflation adjusted value? Even bonds that return paltry interest, and are guaranteed with a dollar so laden with debt that it may collapse are growing in popularity while the stock markets decline.
Could it be that the stock market is still over valued, or that the stocks simply have no value at all.
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Post by kathaksung on Apr 13, 2006 19:04:14 GMT -6
Stock, just like other merchandise, depends on the buyers. If there is no buyers, which mean no body wants to pay for it, then the price goes to zero. But for other merchandise, though the price goes to zero, at least you hold something, a house, a car, gold or a piece of land. But the stock becomes a piece of paper. Becasuse at that time, the liquidation of the company worth little or even a negative value. (owes too much debt) The trick of stock market is how to lure more buyers(investment) into it.
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4. The reverse point
As I have said, a growing up stock market must be supported by increasing investment fund. A $100 market grew up 10% in first year with $110 investment.Next year, to support a $110 market growing another 10% up, you need $121 new investment fund. And $133 for the third year..... To blow a ballon bigger, you need more air.
That's what happened in past 40 years. It's a process of how babyboomers cast their retirement fund into the stock market. It's a process how babyboomers exchanged their treasure(retirement fund) with papers (stock shares). When I said potential losers hold a bunch of papers, I mean the stock paper may lose value any time. (Unlike the certificate of CD which banks guarantee to cash or Grand deed of a house that you have a house, no one has obligation to cash your stock certificate, the only interest(dividend) was often cancelled in the name of re-investment by company)
Now it goes to a reverse point. The first generation of babyboomers reach their retirement age, they will not put money in pension fund any more, instead they will cash the stock in their portfolio for their retirement spending. If the market was originally at 10% growing up step, ($100 stock with $110 new investment fund) now it will be a staggering market or a recess market. The new investment fund becomes 105,(due to less retirement fund) the stock for sale becomes $105 (more old people cash their portfolio), then the stock market stagerring with no growing up. Or a recess, $100 new investment fund with $110 selling stock. Market will fall at 10% rate. (depends on retirement rate)
The World War 2 ended in 1945. The first generation of babyboomers were born in 1946. If the legal retirement age was 63, 1946 + 63 = 2009, then starts from 2009, same problem face to Social Security will face to stock market. Less working people contribute to pension fund, more old people to cash portfolio. A long term growing up stock market will become a long term recess market. The fairy tale will break up.
That's why Bush set the date of his privitization of S.S. in 2008. To save the stock market from collapsing. And deliver the bubble at the cost of young people's retirement fund.
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Post by kathaksung on Apr 23, 2006 11:32:06 GMT -6
5. Bush's privatization plan will endanger S.S. further (5/22/05) (1) "In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes," Bush said. So in 2018, it will be a break even year. If the S.S. payroll tax is $100 in 2008, the actual benefits paid to old people are $90, then there will be $10 surplus fund go to save in current account of S.S. This trend will go on until 2018. But when Bush's plan is carried out, about one third of S.S.tax will go to the privatization account instead of S.S.current account. The calculation is: 35/42 x 1/3 = 0.27. Here I suppose the working years of people are 42 years.(also the period they pay tax. If their work start from 20 years old to 62 when they retired.) the rate of people who enjoy privatization are 35. years. (20 years old to 55 years old which Bush said enjoying privatization) So $27 would go to privatization instead of S.S.current account. There is only $73 left to pay retired people while they were promised $90. The $17 shortage will have to take from the S.S. saving portfolio. The break even year will be in 2008 instead of 2018. Bush should say, "In the year 2008 when my privatization plan goes, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes," Bush's plan accelerates the collapse of Social Security and directly endanger the old people who depends on S.S. benefit. (2) Administration fee. Estimated 2 trillion in ten years period. It will either come from S.S. tax or from an additional tax from all tax payers. One thing for sure is it won't come from the pocket of Bush and his group. Another thing for sure is it will go to the pocket of financial group. Quote, "Economists opposed to Bush's plan say the 10-year, potential $2 trillion cost of shifting to individual investment accounts is reckless and would require such a huge increase in government borrowing that it could destabilize the nation's economy. " ("Social Security change pitched" Mercury News 12/17/04) Quote, "Social Security spends 1 percent of its money on administration. But administrative costs for private insurance range between 12 and 14 percent, according to the American Council of Life Insurance. In Chile, which instituted a system of mandatory private savings accounts in the early 1980s, administrative costs exceed 20 percent. This is your money, going straight into the pockets of Wall Street. " www.thepetitionsite.com/takeaction/504620720?z00m=20239Before you gamble in Casino, you lose first with a fee about 15% to 20%.
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Post by kathaksung on May 1, 2006 19:23:53 GMT -6
6. Average investor in stock market (6/2/05) Everyday, in debate of Social Security privatization, I always encounter with the argument, "Historical, the stock market offered 10% returns over the long haul (40 years)." Or "average S&P goes up 10.5% each year. In latest two years went up 50%." It seems there is a strong reason to invest in stock market. 10% return each year, what a brilliant figure. Yet it's a gimmick. The flaw for this theory is that high return from stock market doesn't mean high return to average investors. But Bush never talked about this. And seldom media talked about this too. One day I finally found a data about the return of average investors. And found why media and government avoid this topic, the most important topic. Read this: Quote, "Over the past 20 years, the average investor in mutual funds that hold stocks earned almost nothing once inflation was taken into account, even though stocks enjoyed terrific gains. These are among the results of the 12th annual study of investor behavior by Dalbar, a Boston financial-research firm. The study found stock-fund investors had returns averaging just 3.7 percent a year from 1985 through 2004, while the Standard & Poor's 500 index returned 13.2 percent a year. Annual inflation averaged 3 percent, chewing up most of the investors' gains." ("Break the buy-high, sell-low pattern" S.J. Mercury News, 5/8/2005) www.philly.com/mld/philly/business/columnists/jeff_brown/11311526.htm?template=contentModules/printstory.jspThere did is high grow up of S & P index, there was also a low return for average investors that almost was nothing if considering inflation. Average people don't care about the high index of S&P. They care about thier return. Where did the money go? It went to the firms which control the market. To my equation, (suppose the stock is S&P index, oringinal price at $100, in 10 years period) 37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years) One thing I should remind you that this is the result of mutual fund. Though there was little gain, the average investors haven't lost its capital because the fund was managed by expert. What if there is a real "privatization", average investor does it individually? Here is a story again seldom to be reported. Re: This is a problem that is beginning to be recognized. Since 1964 Nebraska offered state employees the chance to manage their 401(k)-type plan. Extensive employee education and training seminars were given, and everyone expected outstanding investment returns. But when the state audited the program in 2000, the results were incredibly discouraging: employees were making bad investment after bad investment. So in 2003, Nebraska eliminated employee choice from its 401(k) plan. From: NewCartesian forums.washingtonpost.com/wpforums/messages?msg=2800.351Hardly a gain (with expert) or a loss (invest by yourself even being trained), that's average investors' encounter in stock market. The most important thing is this happened in a grow-up market. That more and more pension fund were guided into the stock market. Yet, average investors had such a poor result. What if the trend reversed? (When the fund lured to support stock market is exhausted like what I said in "4. The reverse point"?) Of course, Bush will never tell you this. Otherwise, how can his group get fatter without your fund joining in?
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Post by kathaksung on May 13, 2006 15:47:59 GMT -6
A myth about wealth
question, "I don't think your equation works very well at all. It is like owning a house. If you do some landscaping and renovations, and keep up with repairs, your house will likely appreciate in value over time. This does not mean you have benefited at the expense of anyone else. Investing in stocks works the same way. The company reinvests most of its profits in expansion and improvements; if they do this wisely then the company will grow in value. It is not the zero sum game that you suggest it is."
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Answer: You still haven't told us how the wealth created in winners' gain. The sample you given is a misleading of company's activity with stock trading. A company of course must work hard to earn a profit so it can distribute dividend to investors. They plant, produce, or do a house repair as you said. It doesn't related to stock trading. The wealth company created was used to distribute dividend. When you said company reinvested its profit in business, that means company diverted the dividend investor deserved to re-investment. You know there had been a period that Microsoft holding the profit and hadn't distribute the dividends to the stock holders. That is typical story fits your "company grow in value". But it belongs to the category of dividend distribution. I have said the dividend is the same thing like interest paid by bank to its investors. There is totally nothing related to the profit gain in stock trading. If you want to know where the profit of winners came from, go to my eqation. It is from the losers and potential losers. Or you show me where it came from.
My equation: Profit( stock winners gain)+ Capital gain(Company issued stock) = Loss(losers) + Potential loss (One who hold the stock)
Or to satisfy you: Profit(stock winners gain) + Capital gain (Company issued stock) + Capital gain 2 (Company re-invest with money originally should be used as dividend) = Loss (losers) + Potential loss (One who hold the stock) + Loss (Investor loss of dividend)
That Capital gain (company re-investment) is always equal to Investors' loss of dividend. It should belong to the category of dividend. (I omitted it because it is similare to interest)
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Post by Kat Sung on May 21, 2006 17:13:01 GMT -6
S.S. is Social security not Social risk
BOOMERJEFF said, "Your equation leaves out the human creativity/innovation/invention/management element.
For example, Cell phone Co may have invested $1 million on R&D to develop the ability to take pictures. They may invest $2 million in a factory to make the new phones that take pics.
.....
So, the $3 milion invested in the picture phones could generate much more profit than $3 million invested in phone-only phones, or $3 million invested in improved pots and pans, or $3 million invested in improved lawn mowers. Thus, the market value - not your theoretical book value - of the picture cell phone stock will rise many times as much as the market value of stock in the phone-only cell company, or stock in the pots & pans company or stock in the lawn mower co.
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When the debate starts, I always encounter with arguments like above one. It used to be: 1. They use unique sample to cover all. 2. Businees belong to dividend category but they mix it with stock trading.
My Answer
1. A new technique will make big money, that's true. It used to be invested by V.C. (venture capital). When one such technique succeeded, there may be 9 others failed. V.C. may invested in 10 companys with one million each. One company succeeded and 9 others failed. The average return is still flat.
Or in stock market, 10 people invested, one made high return like you said, the others suffer a lost you don't mention at. The average return you avoid to talk is still low.
As a matter of fact, it's like the propaganda of gamble business. They say every week there is a millionare prize winner. That the critics neglected the lucky element(in your word, "creativity/innovation/invention/management element.)
Here we talk about average return. Not a lottery. And that average return of stock market for ordinary people is almost nothing consider to inflation. I have that fact in message "6. Average investor in stock market" in this forum.
2. The profit still came from potential loser.
In your sample. If the stock price went up 5 times to the original one and you sold all the stock, then to my equation: 12 million (profit gain by original investor)+ 3 million ( Capital gain of phone company)= 15 million (potential loss of new investors who bought the stock)
Remember the profit gain in stock market is always from the buyer. Because however a company successful the money paid to stock trading is always from the stock buyer (potential loser) not the company.
Then you may ask where is the value created by "human creativity/innovation/invention/management element" goes?
It reflects in dividend distribution. And it used to be a flatened one because such success is always be in consideration when the stock was issued. In another word, the profit was gained by inventors and VC capitalist. (VC capitalist must average the profit with other failed cases) Have you ever heard a company paying dividend equal to its stock price, or even 50% of it? So far as I know, the average dividend is close to the rate of interest bank paid to its customers.
Of course, I always talk about average not lottery or unique accidence. Social Security is a system to guarantee most people have a minimum income when they retired. Not to put them in a risk life when they get old.
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Post by kathaksung on Jun 2, 2006 19:38:10 GMT -6
7. The point is they need fund to save stock market (6/20/05)
In my illustration equation in message 6: (based on fact that the return of average investor was 3.7%, and average return of S&P was 13.2% each year)
37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)
to maintain a high return rate in stock market, special interest group needs more and more fund. In that equation, it's the amount 232 paid by potential losers. Next year, to maintain a 13.2% grow up rate, they need 262 new fund from potential losers. So far it works well becasue they successfully guided the pension fund, then IRA, then 401(k) into the market. But once those who invested in stock market with their pension fund want to cash their portfolio who has that big money to take over the stock papers? They turn on to your social security.
2018 is the year when paid S.S. tax will be less than the benefit paid to retirees. That's 13 years away. 2042 is the insolvent year for S.S. That's 37 years away. Why Bush is so eager on this issue? Because the stock market will have problem in 2009. That's 4 years away. Bush's privatization plan is not to save Social Security, (on the contrary, it endangers S.S.. See message 5. Bush's privatization plan will endanger S.S. further (5/22/05)) It is to save the stock market. The sacrifice is young people's retirement fund.
Back to my equation, when potential loser paid 232 for a stock paper, the money has gone to the winners' profit gain and company's capital gain already. When potential loser wants to cash his stock paper, who has the money to take it over?
That's why Bush and his accessaries bang the drum to propaganda on "high return in stock market" (it's a gimmick, see message 6. Average investor in stock market) to lure people to invest their money into the stock market to take over the hot potato.
Bush's plan is opposed by majority people. But he tries to play with tricks. whatever the new plan he proposed, one thing is for sure: 1. He needs money(fund). 2. The money is from Social Security fund. 3. And that fund will be put into the stock market to save it from collapsing.
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Post by kathaksung on Jun 13, 2006 18:08:00 GMT -6
8. The game is who will be the potential loser (7/19/05)
First of all. People should recognize the difference between average return of stock market and average return of stock investors?
The Dalbar research gave you the result: In latest 20 years, 1985 to 2004, (2005 not finished yet).
Average investor's yearly return: 3.7%. (ordinary people) Average S&P 500 index yearly return: 13.2% (stock price gain)
Get clear the idea of "average investor" and what happened to the difference between 3.7% and 13.2%.
Nobody deny the high return of stock market, only it belongs to special interest group not ordinary people.
I emphysize the average investor's return: 3.7%. Because S.S. is about the interest for ordinary people - the average tax payer, not for the special interest group. And my equation tells where the money went.
37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)
This is how Bush and his S.S. war room show to people: 132 (total profit made in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)
They mix average investor with special interest group.
And this is how ordinary people got in stock market in latest 20 years, almost nothing (in mutual fund) or a loss (401k in Nebraska). A rare data leaking from government censorship net.
Bush and his group only blow the trumpet on that 13.2 but leave the "3.7 and loss" alone.
One thing very important is this took place in a rising stock market. Investor should have a rich profit, yet the result is poor. Where the profit came from? Stock market won't create wealth. It came from potential loser. From 232 paid by new buyer.
In the chart of S&P 500 index, we can see there are two obvious expanding period. The index rose from about 200 to 500 in 15 years. (1980 to 1994) This is the time when pension fund and IRA introduced into the market. And index rose from about 500 to 1200 in 10 years (1995 to 2004). It reflects that how the investment fund baloons the price of stock market.
I made a rough metaphor to make it easy to understand: The original invetor had a stock worth $200 for 30 years, then government introduced a new buyer, Pension and IRA. Pension and IRA paid $500 in 15 years and had the stock price being $500 in 1994. To make market a prosperous one, government found another big buyer, 401(k). 401(k) is a rich man, in 10 years, he raised the market by $700 to $1200. 401(k) now has no extra money to raise the market. (401k paid $1200) G(government) promised it can double in 10 years. But who has that much money to double the price to $2400? G now is in a hurry, the only one he can find is S.S.. S.S. has that ability to boost the stock market, but the problem is 10 years later, when S.S. intends to sell the stock, who has that much money $4800 to take over the hot potato? After all there will be an end. That's how a potential flood developing into a tsunami.
Bush doesn't care. What he wants is at current he and his group can make money. He borrows to pay the bill. (He cut tax by issuing national bond, you people pay it later) He spends at your debt. When crisis break out, he is not a Presidnet any more. Or even he is not alive then. Young people will bear the loss.
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Post by kathaksung on Jun 23, 2006 16:13:48 GMT -6
9. How to blow a balloon bigger (7/29/05)
If the paper value of the whole stock in maket is 20 t (trillion), then there may be only 1 t stock is active in trading. The rest stock is inactive (sleeping stock). Because some owners hold it to control the company; some owners hold it as long term investment. (mostly the people hold it as retirement investment)
Only a little fund can change the whole value. When there is 1.1 trillion investment fund entering the market and caused a 10% increase on 1 t stock, the rest sleeping stock(19 t) felt their asset increased by 10% too. That's how a baloon is multiplied by 19 times.
So there are two ways to increase stock market value. 1. To increase the investment fund in the stock market. This is what government has done to push the pension fund, 401(k) fund into the stock market. And Bush is doing now to put S.S. fund to the market.
2. To reduce the stock for sell also can raise the stock price.
When the money supply is 1 t. But the supply of stock for selling increased to 2 t, then there will be a 50% drop of price.(1t fund/2t is 0.5) Original $1.00 share can only get $0.50. If the stock for selling reduced to 0.5 t. Then the price will double. $1.00 share can sell for $2.00. A 100% increase. (1t fund/0.5t is 2) Reduce the quantity of stock for selling is a more effective way to boost the price.
This is why Bush's plan allow the privatization fund heritable. Old people would have sold the pension stock because it's foolish not to spend it before their death. Now they will think, "if I have no necessity to sell it, whatever happen to me, my son will have it." The inactive stock will go on sleeping. There will be a significant quantity of stock avoid to be sold in the market.
While a small amount of investment fund (say, 1t) support a fantacy of a big treasure ballon (say, 20t), interest group hope more people sleep on the paper stock to go on with their dream. So it will make them easy to blow the balloon bigger and delay the crisis from exploding.
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Post by kathaksung on Jul 3, 2006 19:11:18 GMT -6
10. "Sleep with the stock paper", better forever(8/9/05)
When I have learned the rare data about average investor's return (3.7%), I was surprised that how such a data could be leaked from a tight censorship net of Inside Group.They want people sleeping in the dream that stock market is a gold mine with high profit gain.
A lot of people thought because company having a good business, so stock could be sold at a higher price. That the profit of stock trading was from the wealth comapny created. It's wrong. The wealth company created were distributed by dividend. Even some CEO re-invest or buy back the stock, the money they spent is still a steal from the dividend that shareholders deserved. The reality is sellers profit (or loss) came from the money paid by buyers not from company.
If a company had a profit margin at 1.00/share, and stock price was $10.00, when it makes 1.20/share next year, should the stock price be raised to $12.00? Not neccessarily. When buyers is tight with money. It could be still $10.00 or even a loss, $9.00. It depends on the supply and demand - the stock for sale and new fund willing to invest.
The Nasdag collapsing in 2000 is such sample. When Inside Group thought it was time to harvest, they poured out the stock they held. The investment fund couldn't maintain the usual price, a collapse took place. Did high tech. business had trouble then. No, they still made same profit as usual. But when there was not enough fund going to the market to buy increased amount of stock for sale, the stock price dropped to the bottom too. Nasdaq index lost 2/3 from 5000 to 1700. Those who slept with stock paper with the dream of high profit gain lost their most. The loser is always average investor.
I re-read that "Break the buy-high, sell-low pattern". I found the point of article is: "And that's where some of the good news comes in. Investors slowed the rate of redemptions last year to a pace that would lengthen average stock-fund ownership to 4.2 years. (the 20 years average is 2.9 years) " It advised that if people could hold the stock longer, the return would be better. So in the end it wrote, "As a long-time practitioner of dollar cost averaging, I can note one other benefit: You don't have to make a lot of decisions and you don't second-guess yourself. So you sleep better."
The purpose of the article is clear. With the release of data, it wants you hold the stock not for trading. The longer the better. In last message "9. How to blow a balloon bigger" I've told of the best way to boost stock price is to reduce the quantity of stock for selling. It will make them easy to blow the balloon bigger and delay the crisis from exploding. That's why Inside group want you "don't make a lot of decisions and sleep" on that paper. Better forever.
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Post by kathaksung on Jul 13, 2006 15:07:26 GMT -6
11. Squeeze every bit of your retirement fund to support a stock market balloon.
Read my message "9. How to blow a balloon bigger" you know There are two ways to keep stock price from falling. The two articles from Mercury News show how this government and the media they controlled are working hard to push every bit of money to the stock market to keep the balloon from exploding.
1. One way is try to find every bit of money available in 401(k).
Re: "Automatic enrollment in 401(k) plans is endorsed
Workers must choose not to contribute
By Jack Sirard, Sarcramento Bee
..... Studies show that up to 20 percent of employees who are eligible to join theri comany's 401(k) plan fail to do so.
..... Automatic enrollment, which is a growing trend nationally, changes a worker's decision from having to choose to join a 401(k) to having to choose not to join. " (Mercury News, 7/24/05)
Thus the 20% workers who haven't made up their mind are automatically being pushed into an investment pension fund.
2. The other way to keep the stock price from falling is to reduce the stock for selling. Re: "Almost half of job-switchers cash out 401(k)s
By Kaja Whitehouse, Dow Jones
Almost half, or 45%, of all workers who left their employer last year opted to cash out their 401(k) savings, according to a new study. .....
Employers would often force distributions for accounts worth less than $5,000 because they found them too costly to maintain. .....
Under the new rules, employers are required to either maintain small balances - defined as anything between $1,000 and $5,000 - or automatically roll the money into an IRA when workers depart. This way, workers with small balances will only take their money in cash if they take the initiative to do so. " (Mercury News, 7/26/05)
This is how they push workers to join 401(k) investment plan, and try their best to prevent workers from cashing their 401(k) portfolios, even if it's a small amount.
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Post by unlawflcombatnt on Jul 14, 2006 1:44:02 GMT -6
Thanks for the post.
Automatic enrollment in 401Ks certainly would increase the value of the stock market. This is just de facto government subsidization of the stock market. Workers are induced to put relatively large amounts of money into 401Ks for relatively small amounts of tax savings. Workers are basically giving Wall Street their money, in exchange for the Federal government reducing their taxes a fraction of that amount.
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Post by kathaksung on Jul 24, 2006 12:30:19 GMT -6
12. Paper value (9/2/05)
Why did I say people who bought the stock are sleeping on a paper? Because if it is liqudated, most likely you will get little money back. And CEO of these big firms don't work for the interest of shareholders but for the interest of Inside Group.
Five years ago, when managers of pension fund held billions of Enron's stock, they never knew they were holding only a bunch of pieces of papers which worth nothing. Did Enron lost its value in one night or just in a short period? No. A lot of firms are run in same way. What about GM? It's bond was ranked as junk recently. What does that mean? It means GM is in same level like Enron had been. The debt it owes is much bigger than its asset. The long term bond GM issued is about 300 billions. Compare to Iraq war, its cost is only 68 billion a year. Yet, GM is still a foundamental stock of Dow Jones index. How many other companies are in the same level?
Since stock market is such a market full of balloon. Those expert who know it deeply avoid to get involve in it. Here is an article published recently.
"Greenspan invests cautiously
By Jeannines Aversa, AP,
Greenspan keeps all of his holdings in money-market accounts and Treasury securities, which are considered the world's safest investment, a financial disclosure form shows."
(Mercury News, 7/29/2005)
Further more. on 8/27/05, Mercury News reported:
"It can 'readily disappear' if economy stumbles
Rising house and stock prices have made many people feel more wealthy and have helped to support consumer spending.
Greenspan, however, said people shouldn't count on that paper wealth, which can evaporate if economic conditions deterriorate rapidly."
I have repeatedly said the stock is no other than a paper in this thread. Seven days ago, Greespan's comment proved my opinion.
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Post by kathaksung on Aug 2, 2006 17:37:07 GMT -6
13. Fallacy (9/12/05) Fallacy 1. "Politicians stole all the extra SS tax money and spent them in the general fund for their own purpose." Answer: The surplus of S.S. tax are now in the form of "I.O.U." which is no difference to the national bond. To the logic of fallacy, when people deposit their money in bank, he will rant: "The money is all gone. The bank spent it by lending it to the others. But what's the business with him how does bank spend the deposit? What people care is the bank will pay them back the deposit with interest. In sameway, what's business with him when the Congress spend it in general fund? Only when they will pay it back with interest. Remember if they don't borrow from S.S.Trust fund, they still will borrow by issueing Treasury note. Fallacy 2. "I like privatization because I can handle it by myself. I want have my own choice." Answer: The original purpose to set up Social Security is to guarantee people will have a stable income when they retired. Privatization won't guarantee this. It put Social Security in a risk. People pay insurance company. The payment is guaranteed to be used in retirement payment. Bush lured them to a casino, said that people may win more. The reality is people then will exchange their money with a paper its value may evaporate when economy turns downward. It's not for a stable society but lead the society to an dangerous gamble. Yes, there are many choice of gamble: Black Jack, slot machine.... but more you gamble more you will lose. Fallacy 3. "Social Security will collapse". Answer: It's an intimidation. A tactic Bush used to use all the time. He had cried, "sky is falling" 28 years ago, the sky didn't fall. Re: 'For Bush, a Long Embrace of Social Security Plan By RICHARD W. STEVENSON Published: February 27, 2005 in the summer of 1978, in the heat of his unsuccessful race for a House seat from West Texas, G.W.Bush said Social Security "will be bust in 10 years unless there are some changes," www.nytimes.com/2005/02/27/politics/27social.html?pagewanted=1&ei=5094&en=0a958f02348dd46b&hp&ex=1109480400&partner=homepage He scared us into an unnecessary war. He is now scaring us to give him the power to handle our retirement fund. But insolvency is 37 years away. (2042) If US could solve the same problem in 1978, so can they do in 2042. Bush has better to deal with the historical national deficit which he created. If he can't handle the war spending and disaster spending well, US economy will collapse much earlier than S.S. he intimidated.
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Post by kathaksung on Aug 13, 2006 17:57:33 GMT -6
14. Stock market profit came from the buyers not from the company.
Fallacy 4. "Company did spend their profit in stock market. Some of them bought the stock of their own company."
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Answer. This is a typical problem how CEO of companies abusing their power. Yes, some companies did buy the stock of their own to boost the stock price. But remember the money they spent were the profit of company. It belongs to shareholders. The money should be distribute to shareholders as divident. But the CEO intercepted the profit to manipulate the stock market. They don't work for the interest of shareholders but for the interest of inside group.
So there is an important opinion you must know: that the profit gain from the stock market is not from the company but from the later buyers. (potential loser)
An individual company may gain a good profit. That profit won't play the role to raise the gain in stock trading. The company profit is paid to stock holders as divident. Whatever the media tell you the economy is good, the fact of current situation is: The average divident rate of stock market is 1.5%. You invest 10 dollars in stock, the average divident income is 15 cents per year.
Then how can you have a 11% annual gain in stock market trading? It's from the money of other buyers. When you bought "Google" at $100 a share and sold it at $300, keep in mind that it's not the "google" company paid you the $300 but another buyer paid it. So it's the other buyers' investment let you make money.
This is a point very important. Not the Company profit but the continueing coming investment push up the stock market.
To make it more easy to understand, the trading stock worth at $100,(or you can say it's 100 billion) next year new investment coming at $111, (or 111 billion) then there is a 11% growing up rate. Because government pushed the pension fund into the market these years, so you saw an average 11% gain each year. It only means more and more pension money became paper. Money was harvested by sellers. What left for later buyers are only stock papers, (they hope new buyers will take it over with even higher price).
What is the current stock market? A bunch of papers. The stock holders exchanged them with their pension fund. (with 10 years, 20years...even 40 years of their pension fund). If they want to cash these papers, who had that much money? That's why Bush desperately to push the S.S. fund to save the market from collapse.
If the Privatization succeed, it only delay the crisis from expoision but make the balloon bigger. The young generation will be the victim because Bush lured them to take over the hot potato(stock paper) with their retirement fund.
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Post by unlawflcombatnt on Aug 13, 2006 18:42:32 GMT -6
Kathaksung,
You're right on target with this. The stock market benefits tremendously from pension plan investment, which is encouraged by 401Ks and IRA deductions. And that money is gone if the stocks this money was invested in collapses. But, of course, it won't collapse before the CEOs and major investors have gotten their money out of it already.
And you're right on target about Bush's scam to "privatize" Social Security. It's just another gimmick to give Wall Street more of workers' money. This time it would actually involve the government borrowing money to subsidize Wall Street, putting our country in even greater debt.
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Post by kathaksung on Aug 23, 2006 17:33:03 GMT -6
402. Bank robbery in San Francisco (1) (4/25/06)
In 1998, there was a financial crisis in South-East Asia. After the currency collapsed in Thailand and Indonesia, the I.S. (International Speculator) turned to Hongkong.
In August 1998, there was a stock market battle between Hongkong government and I.S.. In option market, I.S. bought low future index of stock. Hongkong government tried to raise the stock market index. To sell down the index, the I.S. even borrowed the stock from other firms and rich celebrities for selling off. Hongkong government bought these stock in with its foreign currency reserve. At last, Hongkong government won. The Hansen index (stock index) stayed at 8000 level. A hedge fund company suffered a huge loss and would go bankruptcy.
I was interested at the news that I.S. borrowed the stock from the other people to sell down the market. These stocks now were in the hand of Hongkong government. (11% of the blue chips) The gvoernment said it would keep these stocks as reserve. So how could I.S. return the stock they owed to other firms? It had to buy back the stocks from the market. On the other hand, I.S. must earn enough money back to save its company from bankruptcy. If it couldn't sell down the market, the other way it could do was to buy it up. So I speculate there would be a bull market. Hongkong stock market generally follows the Wall street. So a booming Hongkong market meant there must be a booming US market first.
I have never traded US stock before August 1998. With above confidence, I bought 100 shares of Boeing and 100 shares of City bank in September. I bought them not based on economy or any other technique factor but on opinion that the stock market was manipulated by financial group. And the financial group was manipulated by intelligence. This was a rare time that they had to push up the market to save their firm.
The later development proved my opinion was very correct. From the end of 1998 to 2000, there was a booming stock market. Both Dow Jones and Nasdaq reached their historical high. It was so high that its collapse became a milestone. That was the break up of the dot.com bubble in 2000.
Though I correctly foresaw the booming stock market of 1999, it also brought disaster for me. The intelligence views the stock market as its cash register. They don't allow a target to make profit from it.
After I bought the stock in September, the persecution went crazy. In the end of that year, for a lot of time I had to leave my home to sleep at my parents' house in San Francisco.
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