I hate to tell you this.
It might be something you’re already aware of. But just in case, I’ll tell you anyway.
The legacy financial system doesn’t want you to make money.
That’s just the way it was built and the way it’s been developed over the years.
If it makes you feel any better, it doesn’t want me to make money either.
You, me, and most people out there simply aren’t supposed to make money. Not according to those in control. Not real money. Not ‘generational’ money. At least not without a massive chunk of it to start with.
They simply don’t want us to. And it’s for our own good, if you ask them.
By the way, the ‘they’ or ‘them’ I’m referring to are the ones that have pillaged and plundered the markets for the last century. The financial and political elites that are in control of billions, even trillions in wealth.
They want to retain their ownership and control of their powerbase. And that powerbase is predicated on their wealth pile. Why would they want to give anyone else a run at it?
That’s not to say that you or I can’t carve out a comfortable, financially stable…even wealthy life for ourselves.
But the reality is, we have to grind and graft away at it. We have to eke out every opportunity we get. We have to bust our backside through hard work, upskilling, starting or creating something of value, etc.
To just make wealth in the markets, it’s not happening. Well not on the scale that we’d all like. Not the kind of money that means real power. Not without a massive bankroll. Not without the major backing of those already with that financial powerbase.
Not without being friendly with those who will let you make money. To be up there, you’ve got to start up there.
While that’s a bit of a downer, the upshot is you can still make money.
Meaningful, life-changing money.
Just don’t expect to threaten the powerbase of the financial elites — at least not using the current ‘legacy’ financial system. They simply just don’t want you to.
They don’t hide their disdain
The whole concept of a free market should exist. In a truly free market, you might have a chance at really making a bundle in what I call our ‘legacy’ financial system.
But the markets and the system we are faced with is anything but free. It’s closed. It’s full of friction and barriers. It’s expensive, it has limited access…it’s just an inefficient market.
And if you had any doubts about that, take a look at the latest report published by market regulator ASIC, titled ‘Retail investors at risk in volatile markets’. According to the summary on their website:
‘ASIC analysis of markets during the COVID-19 period has revealed a substantial increase in retail activity across the securities market, as well as greater exposure to risk. We found that some retail investors are engaging in short term trading strategies unsuccessfully attempting to time price trends.’
‘Even market professionals find it hard to ‘time’ the market in a turbulent environment, and the risk of significant losses is a regular challenge.
‘For retail investors to attempt the same is particularly dangerous, and likely to lead to heavy losses – losses that could not happen at a worse time for many families.’
The crux of their point was they’ve seen a surge in retail investors trying to use a market opportunity to make money. Well, of course. Why wouldn’t they in one of the biggest market crashes in history.
Now is a perfect time to look at risk assets if you’re smart and know where and how to find the right ones. But remember, they want to scare you into doing nothing. They don’t want you to make money.
Admittedly, this has been a weird flight to risk instead of away from it, as you’d expect in a crash.
The very fact that investors are behaving in this way is a symptom of the fractured and broken legacy financial system in the first place.
You see, there’s a reason that during this crisis the market has behaved extremely abnormally.
That’s because of the ongoing erosion of wealth of the middle and lower classes.
The savings rates on deposits has plummeted because of massive cuts to interest rates.
Thanks to government supported closure of the economy, income from investments like dividends has been slashed.
An avenue that retirees look to for income, disappeared like the flick of a switch.
Values in superannuation pots, crushed as markets responded to market crashes, in response to government shutdowns.
Incomes lost due to furlough or redundancies. Unemployment spikes and property valuations spiralling lower.
Rampant money printing, stimulus packages from government weakening the value of the dollar. And longer term, quite likely the expectation of huge inflation…which has already struck if you’ve been checking your weekly grocery bill lately.
Tuesday is a day you want to pay attention to
All of this points towards a continued squeeze on the middle and lower classes. It forces people to look for other ways to make money, to build wealth.
It drives typically not so risky investors into risky assets just to try and find ways to cover off their bleeding losses. They force you into these assets because they’ve rigged the game.
This all isn’t a result of a virus. It’s a result of a sequence of terrible economic decisions led by politicians not fit for purpose and scientists who have no regard for the long-term impact of their decisions.
Politics and flawed modelling have resulted in decisions that have crushed economies globally. And that toll will quite possibly be even worse than what SARS-CoV-2 has dished up.
So, when ASIC publishes a report saying that retail investors are driven to risky assets in this crisis, my initial thought is, ‘You don’t say, Captain Obvious.’
That’s because there’s no other choice. It’s because the legacy financial system has failed us.
The Sydney Morning Herald (and associated publications), of course, picked up on ASIC’s report and true to form, wrote:
‘One only needs to see the COVID-19 carnage experienced by professional investors to understand that amateurs stand little chance.’
Well, that’s just utter nonsense. And the idea that investing in risky assets shouldn’t be taken by retail investors is equally absurd. While they might not want you make money, that doesn’t mean you can’t.
Now I will say, you’re not going to be the next Warren Buffett. That’s not happening. And following movements or actions of people like him will get you into trouble in modern markets.
He can afford to take a massive hit on a rubbish call to invest in something like US airlines. Most people can’t. That’s why you need to be very selective of who and where you get your advice from.
Still, while you might not be the next Buffett, you can still make a packet on the market. But, as I say, if you know where to look.
For example, this week one of the pioneering tech stocks we recommended to subscribers in my Revolutionary Tech Investor service, in December 2019, shot 116% higher in a single day. This is in the midst of a crisis ‘not seen since the Great Depression’ remember…
The point is, great companies will do great things in any market. Boom, bust, or boring — there are always opportunities to make money in the market…and even in some of the more ‘alternative’ markets.
You can make money in stocks. You won’t make billions, but you can turn small stakes into meaningful, life-changing cash.
And tomorrow I’ll explain how you can also create wealth, and this time I do mean real ‘generational wealth’, from an opportunity that comes around once every four years…just not in a way you might expect.
Luckily this opportunity will happen thanks to a ‘hard-coded’ event’ set to take place on Tuesday. And if you’re prepared for it, then I think we could be talking about the kind of wealth the legacy system doesn’t want you to have.
Editor, Money Morning
PS: In this free report, Money Morning analyst Lachlann Tierney reveals two assets set to benefit as the ‘corona crisis’ worsens. Click here to claim your copy today.