Real Estate Investing vs The Stock Market
How many times have you heard the question, “Is the stock market rigged?”
Please, let us answer that question for you – Yes. The stock market is rigged, but we’re not the only ones who believe it. Michael Lewis, a sports and financial journalist & author who wrote, The Blind Side and Moneyball states that “the stock market is rigged” by HFT (High Frequency Trading) traders who “front run orders” placed by investors. He details this process in his newest book, Flash Boys.
Basically, in the traditional sense of stock trading, buyers of stocks place orders to be filled by brokers. Today though, computers do everything. In theory, it should be a rather safe, error free system that is impossible to rig. The truth though is that it IS rigged. Watch the video to see how.
Not Only the Stock Market
In fact, many so-called “risk” oriented American industries are rigged to the point that there is almost no risk involved for the owners of one of these enterprises. That, of course, results in massive profits on the backs of individuals who don’t know any better.
Like a Las Vegas casino or the insurance industry, the stock exchange puts the risk on the individual investor – not the broker, the shared company or the exchange itself. There are managed odds that make winning possible, but because only “the house” really knows how everything works, losing is PROBABLE.
Insurance is Rigged
For instance, for the insurance industry, the goal is to take in more money than is paid out, yet for the actual insured party, the goal is to give them NOTHING – “0 sum”. What that means is that the insurance companies will fight to make sure that there is no winner. In the case of insurance companies fighting each other over a claim: They’d rather the lawyers end up with the money than the claimant – “0 sum”.
To take it further and ensure that they ALWAYS come out winners, insurance companies influence our politicians to pass laws that benefit their industry – like Obamacare, which REQUIRES every man, woman and child in the US to purchase health insurance..
That influence comes in the way of massive campaign contributions, cushy jobs for family members of elected officials and, sometimes, even bribes.
What sets the stock market apart from insurance and the casinos though, is that the Stock Exchange is SELF REGULATED.
Yeah, they make their own rules.
Stocks are only paper, like money is only paper. You can’t eat paper. (Ok, you CAN eat paper, but it doesn’t have the nutritional value of, say, vegetables or meat.) What we mean by that is that paper’s value is “perceived” and is only worth what the majority of the general population deem it’s worth. Paper has no real, beneficial, body & mind empowering value. Stocks and money are little more than I.O.U.s.
Real Estate on the other hand, is a REAL asset. Heck, it’s even in the name: R – E – A – L.
Why buy paper, instead of say, HOUSES?
People buy stocks and collect coins and cars and dolls because of a “perceived” value that is perpetuated by others in the industry… and the stock market is a VERY POWERFUL INDUSTRY. “Powerful“, as in it gives lots of money to political candidates to influence how their industry is regulated… or NOT regulated.
You see, the stock market is self-regulated, meaning that it makes it’s own rules and passes down punishment to those it regulates, with no (or very little) influence from the federal government. This of course keeps the general public from understanding how the industry really works.
Ignorance is bliss, right?
Self regulation is the fox watching the hen house. Self regulation is little more than a promise to the American people to do what’s right… when they get caught by the American people doing wrong. However, if no one gets caught, then obviously no one was doing wrong. So, obviously, self regulation puts the burden on the common citizen or “whistle-blowers” to speak out against those industries that are supposed to be regulating themselves.
And for their diligence and commitment to the American people, they’ll probably be killed.
The real problem with self-regulation is that people are inherently lazy. We don’t want to do any more than what actually NEEDS to be done.
On top of these horrible revelations of political and monetary gluttony, we’re right in the middle of the 3rd biggest stock bubble in recorded history! Read this article in Market Watch to see what we’re talking about. There’s even more here.
So, the lesson in all of this is to just save yourself some stress and aggravation and buy some investment real estate already.