“The stock market has long since been a place for investment. It now occupies the same space as casinos, OTB establishments, and lottery tickets. If you can understand that premise, you have a fighting chance.”
The preceding three sentences would constitute the opening paragraph for an investment guide if I were to write one.
On a daily basis, I see headlines that entice the general public to get on board: “It’s a Buying Opportunity” and “The Big Banks Smile on Equities.”
Just below those main headlines are additional articles detailing why it’s now time to separate you from your money: “Spain Merits Wall Street Shrug,” “Foreclosures Hit 5-year Lows,” and “Sprint Nextel Rallies on Reported Buyout Effort.”
It all sounds really good until you take a trip to Las Vegas or purchase a Mega Millions lottery ticket and hear pretty much the same thing : “The Best Odds in Town,” Higher Payouts Than the Next Guy,” “A Dollar and a Dream,” You Gotta Be In It…To Win It.”
An investment, according to Wikipedia, is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time.
Given the domination of high-frequency trading, the Fed’s manipulation of currency, and sovereign leaders’ constant denials of reality, today’s financial markets, lacking that degree of aforementioned security, are about as far away from the Wikipedia definition as you can get. However, once you realize that fact, you may want to spend more time on the sports page than you do on the financial page (newspaper, internet, and television.)
Your investment in this Sunday’s professional football game may have a much better chance than a stock purchase of Facebook, LinkedIn, or even that great core company, (pardon the pun) Apple.
Will Tom Brady play this Sunday? Does Peyton Manning still have what it takes? Will there be a snowstorm in Buffalo?
All these questions have the very same validity as those inquiries that are currently being asked about Spain’s bailout, Greece’s exit, or even QE 3½.
The stock analysts’ earnings expectations and estimates are no more valid than the most recent morning workout of a top thoroughbred, and perhaps not as important. For hundreds of years, the stock market has been perceived as investing, while wagering on sports has been recognized as gambling.
Today, it’s time to clear the deck and rightfully say it’s all the same.
The last chapter in my investment guide?
A hypothetical suggested portfolio consisting of living benefit annuities, U.S. Treasuries, income producing REITs, farmland, two stocks, the San Francisco 49ers, instructions to double down against the blackjack dealer’s five-card, and two lottery tickets per week.You decide what an investment is and what is not.