I was Highly, Highly Encouraged (HHE) by a guy named only Spengler writing at
atimes.com, who writes, "Today's savers no longer can have any confidence that
they will earn enough to fund their retirements by putting money at risk"! [1]
I included an exclamation point there at the end to signify this as the most
incredibly good news; people are finally getting smart, and they are learning
the grim reality that the majority, and sometimes all, of investors are
guaranteed to lose by doing something as stupid as investing in the stock
market, mostly through the loss of purchasing power.
That is the Ugly, Grim Reality (UGR) of investing that nobody ever wants to
talk about, mostly because the government doesn't want
to talk about it since government depends vitally on the tax revenues generated
by that all that buying, selling, churning and burning of investment monies
(70% of profits are made by the financial services industry), and the bankers,
Wall Street hucksters and financial services charlatans don't want to talk
about it, either, since selling that silly crap is how they make their money,
too! Hahaha!
And, as my dismal experiences on this planet prove, not only do people not want
to talk about it, but people don't want to hear about it, either! Like, for
instance, I was at this party last weekend and I heard this guy saying to this
girl, "Hey, baby, let's go over to my place and get crazy!" and she was cooing
back through half-lidded eyes, "Ooooh, yes!", and so I said to them, "Wait! You
would be MUCH Better Off (MBO) if each of you immediately went home and
arranged to get your stupid little retirement accounts and other
dollar-denominated assets out of the stock market and into gold, silver and oil
as soon as possible, because your dollars will lose so much buying power! So go
home! Right now! Chop chop, you morons!"
I will not tell you their rude response, or how the host of the stupid party
made a big stink about how he didn't even know me, and how I wasn't "good
enough" to be at his stupid party just because I happened to be going through
his garbage cans and I heard the music, cleverly figuring that there would be
some tasty eats inside. And I was right!
So, although I did not convince the host to let me stay at the party, let me
take a few snacks along "for the road", or induce anyone to transfer their
money from stocks and bonds to gold, silver and oil, the fact is that the
majority of "investors" must lose, especially when measured in purchasing
power, which means that even if they manage to make a paper gain, it makes me
laugh like a freaking hyena to see the delight in people's eyes because not
only are the long-term aggregate capital gains always predictably less than the
aggregate damage done by inflation (also over the long term!), meaning that you
lost purchasing power; but you as the "successful investor" have to pay some of
those devalued dollars in taxes on those realized capital gains, too, even
though you made a real, inflation-adjusted loss! Hahaha! The old "double
whammy"!
And this is all thanks to inflation in prices caused by the Federal Reserve
creating the excess money and credit that let a greater fool borrow the money
to pay for your 20% gain. Hahaha!
Welcome to modern America, where the rich get richer by borrowing money and
credit created by the Federal Reserve, and then loaning it to the government,
while everybody else gets poorer as the resultant inflation in the money supply
is diffused through the economy as inflation in prices, unless the workers
demand higher wages, which makes the prices of things that much higher, as the
companies recover their higher labor costs! Hahaha! Idiots! We're freaking
idiots!
Bill Bonner here at The Daily Reckoning concurs, although if you ask him, he is
most emphatic that he has NOTHING in common with The Mogambo, he has NEVER
knowingly agreed with me about anything, and in fact he never even HEARD of
anyone named Mogambo.
Nevertheless, I cleverly twist his words to prove my point that the majority of
investors have to lose money by quoting him revealing the grim statistic that
"From the peak of 2000 'til today, stock market investors have earned nothing
for their trouble. In nominal terms, stocks are about where they were 10 years
ago. Adjusted for inflation, they are down 25%-80%, depending on how you
measure it." Yikes! Ten years! Gone!
Ten years ago, the average investor invested a whole six-slice pizza. Now, they
have as little as one slice of a pizza to show for their efforts? And somebody
still thinks that they can fund a retirement on that kind of performance?
Hahaha!
And not only that, but since you invested when a pizza cost $10, only to get
back $12 later (a 20% gain!) when pizzas cost $14, you are obviously a loser,
thanks to inflation in prices caused by the Federal Reserve creating the excess
money and credit to let a greater fool borrow the money to pay for your 20%
gain.
In short, you "made" $2, paid some taxes on the "gains", only to find that your
loss of purchasing power means you actually lost money, and you had to pay a
tax for the privilege!
And you are going to fund a retirement by constantly losing buying power of
every dollar you invest? Hahaha!
You know I was going to bring up the subject of gold. That is good. That means
you know what to do, and all you need is somebody to come over there and kick
your butt until you do it. Call for current prices!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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