scenic tour on wall street

DISCLOSURE:

I am not qualified or licensed to give financial advice - this is simply my opinion.

Earlier this year, I liquidated all my stock holdings and placed my assets into a money market.

My portfolio wasn't perfectly correlated with the Dow - but wasn't all that different.


So take a look at this stock market graph (links to msn money)

http://tinyurl.com/8yrran8

I sold when the dow was 11,500. Today, it's 11,800 --- and has taken a scenic tour that ranged from 10,600 to 12,800.

I believe in markets - but the markets aren't doing much of value.

Wall Street is making money by generating paper profits on the margins (speculating and trading). The problem - income isn't coming from providing capital to promising ideas, or by increasing value (productivity, etc.)

I haven't made up my mind if I'm a reform-minded investor (change the way Wall Street behaves? -- yeah right) - or if I'll simply join the crowd that signs up with a trader - telling him/her to generate 10% ROI, annually - and not to confuse me with the facts about how s/he is doing it.

I'm a romantic - and would prefer to be providing capital to promising ideas (IPOs). Unfortunately that doesn't seem to be where the profits are, these days.

bailey bud wrote: or if I'll simply join the crowd that signs up with a trader - telling him/her to generate 10% ROI, annually - and not to confuse me with the facts about how s/he is doing it.

I'm a romantic - and would prefer to be providing capital to promising ideas (IPOs). Unfortunately that doesn't seem to be where the profits are, these days.

Could you amplify your sign up with a trader remark?

IPOs , I have never had the horse power to get an allocation.

I have gradually been transitioning from speculative oil and gas stocks to dividend payers a la: http://www.siliconinvestor.com/subject. ... ctid=56874

IMO cash is trash.

N.C. --- This past year - the best way to make money would have been to exploit price volatility, and trade (automated buy low, sell high strategies). There are money managers out there who simply trade, buying on bad news, and selling with good news. It would have been easy to land a 20% r.o.i with that tactic, this year.

Funny thing is - most of the companies generating the volatility - haven't changed, fundamentally. The volatility is almost entirely sentiment/hysteria based. (making money on someone else's panic).

Like I said - I'm kind of old school --- I'd rather be investing in an emerging company/industry ---- actually getting something for my capital --- than making money on someone else's panics. (I like there to be substance behind my profit).

I believe in markets - but the markets aren't doing much of value.

Wall Street is making money by generating paper profits on the margins (speculating and trading). The problem - income isn't coming from providing capital to promising ideas, or by increasing value (productivity, etc.)

BB- I agree. Prices swing +/- 30% when you may be looking for steady 4-6% annual gains long term. The daily volume of shares changing hands and churning is mind boggling. Then you add in derivatives and high frequency trading. The best thing a small investor can do is dollar cost average and slowly build up a long term position. Not as easy to do as it sounds.

It sounds like you are talking about IPOs and secondary offerings. These are generally only available to million dollar accounts with big firms. Its a sham because they all lock in a profit and sell to the general public at a higher price during the first week of trading.

Google's IPO tried something different, I thought it was an interesting experiment, but it didn't seem to catch on.
http://en.wikipedia.org/wiki/History_of_Google

They chose the unconventional way of allocating the initial offering through an auction (specifically, a "Dutch auction"), so that "anyone" would be able to participate in the offering. The smallest required account balances at most authorized online brokers that are allowed to participate in an IPO, however, are around $100,000. In the run-up to the IPO the company was forced to slash the price and size of the offering, but the process did not run into any technical difficulties or result in any significant legal challenges.

There are also venture capital funds, but again only for million dollar accounts. And lots of those ventures lose big money too. Only a few hit home runs. I had an opportunity to work at a small start-up company in Denver a couple years ago, they were paying all salaries in private stock shares, no cash for the first year. I would have done it but I wasn't impressed with the management and business plan they showed me. I looked later and they seemed to have disappeared. I would have made zip.