Paul B. Farrell: Stocks a sucker bet in a rigged game; meltdown ahead

By Paul B. Farrell, MarketWatch


SAN LUIS OBISPO, Calif. (MarketWatch) — Do not buy stocks. Not for retirement. Not in the coming decade. Don’t. Huge risks.

Wall Street is a loser. Stocks are Wall Street’s ultimate sucker bet. And it’ll sucker you again. You’ll lose, worse than in the last decade. Wake up before Wall Street banks trigger the next meltdown, igniting mass bankruptcy.

Here are 10 more reasons not to bet at Wall Street’s casino … wait till after they implode:

1. American stocks are a high-risk sucker bet

That’s the view of Peter Morici, the former chief economist at the International Trade Commission: that U.S. stocks are a sucker bet. Is Main Street waking up to Wall Street’s con? Maybe. “With corporate profits breaking records, Wall Street anxiously anticipates the return of the individual investors to the stock market. It may be a long wait, because the little guy may have concluded investing in stocks is a sucker bet.”

America’s divided into two stock markets: one for Wall Street’s rich insiders, another for Main Street’s suckers: “Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.”

From 1998 to 2010, profits rose 203%. But the S&P 500 was up just 7%. And still, naive investors buy into Wall Street’s sucker bet.

Who’s pocketing the huge profits? Rich insiders. “Because most of the increased value created by higher profits,” says Morici, “has been captured by hedge funds, electronic traders, private equity funds, and aggressive M&A shops, free standing and at major investment banks, which have multiplied over the last two decades.”

Warning: With the resurrection of the GOP and Reaganomics, Wall Street will skim more from Main Street, get even richer. And yes, you’ll lose more.

2. New ‘big short’ dead ahead: Derivatives con game will crash again

In a Bloomberg story, “Big Short” author Michael Lewis asks: “Why are the same Wall Street banks that lobbied so hard to dilute the passages in the Dodd-Frank financial overhaul bill banning proprietary trading now jettisoning their proprietary-trading groups, without so much as a whimper?”

The answer’s simple: Wall Street’s sneaky and will do anything to keep the derivatives casino running hot. Insiders “have no intention of ceasing their prop trading,” according to Lewis. “They are merely disguising the activity, by giving it some other name.” .............(more)

The complete piece is at: http://www.marketwatch.com/story/10-reasons-to-shun-stocks-till-banks-crash-2010-12-07

That most las vegas games are based on hard math, and are regulated far more than wall street ever is, was or could be.

At least in Vegas you know exactly how it is rigged.

But if you would have bought Ford stock when Obama was elected telling everybody he was not going to abandon the auto industry you would be sitting on a 500% gain in a span of 2 years.

With the exception of the original issue, the money you pay for a stock goes to another speculator (read gambler) and is not invested in the company (the company sees none of it). You are buy chance that the stock value will go up which is not directly related to how good a company does. There are numerous ways to manipulate stock prices and if you are lucky, you might win, but the manipulators always win.

At least in Vegas there are strict rules. The Stock Market has loose rules that are loosely enforced.

What's the strategy knowing this is going to happen?

Bonds? Treasuries? Magic beans?

If people knew the future this well...........