Financial Security: Gold or Gambling

In no aspect of our lives has the brainwashing of bankers had a more profound effect than when it comes to “investing”; and yet, once we strip away that propaganda, the truth becomes painfully obvious.

Let's start with a basic principle: all investing is gambling. I realize that there are many investors who spend a great deal of time and effort in doing their “due diligence”, and who will take offense at my conclusion. Understand that professional gamblers who “play” the horses also spend large amounts of time with their own “due diligence” - handicapping the horses they bet on. The only difference between “playing” horses and “playing” stocks and other “investments” is the level of risk, or probability of success.

In this respect (thanks to the bankers' propaganda), investors labour under the delusion that their form of gambling is inherently superior to the other recognized forms of “gambling”. In particular, these investors will steadfastly claim that they can make a more reliable return on their equities-gambling than the “investors” who frequent race-tracks and casinos.

The facts say otherwise. All equities markets are a “zero sum” game: that is, for every winner in a trade there is a corresponding loser. This is tempered by two dynamics. Some corporations produce real wealth, and thus their shareholders will participate in that increased wealth, over time; and some corporations (either through bad luck or bad management) destroy wealth – and their shareholders also participate in those losses.

In theory, this means that equity investing should be able to generate a positive return over time (if investors are reasonably competent in choosing their investments). However, even here investors face a dilemma. The larger and more-established corporations are usually safer to hold, but to obtain that “safety”, investors must sacrifice with respect to potential “return”, since it is much easier for smaller corporations to produce a high rate of growth than large corporations.

Of course, even the largest corporations can suffer spectacular failures. Just ask the shareholders of Enron, or Nortel, or Lehman Brothers, or Merrill Lynch, or Washington Mutual, or Wachovia Bank, or (today) BP Plc. Those “spectacular failures” can rapidly destroy any and all real gains in one's investing – especially once we factor-in another “dynamic” of markets: our wealth is constantly being stolen by the bankers.

Bankers steal from us in so many ways that it would be impossible to discuss them all in a single commentary. So I will refrain from discussing how bankers steal from us through excessive “service charges” (to use automated functions), and usurious interest rates on their loans, and instead simply focus on how they steal from “savers” - both individually and collectively.