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inthemoneystock (< 20)

Who Is At Fault? Fooling The Average Investor



January 09, 2013 – Comments (3) | RELATED TICKERS: SPY

Every market sees a major boom, then a bust. In the last decade however, this boom and bust cycle has gotten increasingly faster as institutions feel they can rape the average investor multiple times a year, rather than once or twice a decade.

A large part of the blame falls on the Federal Reserve as their meddling in the economy creates bubble after bubble. The blame also falls on the institutions who take advantage of this, while still more blame falls on the media for pumping the markets when they are at highs and trashing them when they are at lows. While all these forces work beautifully to transfer wealth from the investing public to the institutions, the investor must take some of the blame. It seems that in the markets today, the average investor is an idiot, continuing to try and buy highs and sell lows. Generally, the saying goes, "Fool me once, shame on you. Fool me twice, shame on me." The average investor seems to get fooled hundreds of times yet still will not blame themselves and look for improvement.

These are the markets we live in. Those in the know, that learn from their investing mistakes make money while the general masses will lose.

A great example of this was the Fiscal Cliff deal just reach last week. The markets soared for a few days, putting in a solid up week. This up week and media coverage was just enough to coax a majority of average investors back into the market. No sooner was the deal done and the little investor in, we have seen weakness. Even today, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) pushed up early in the day, yet has now given back a majority of its gains. This does not look like a market with legs following a great deal on the Fiscal Cliff.

Bottom line is this: The Federal Reserve enables it, the media hypes it and the institutions take advantage of it. Lastly, the average investor repeats their errors, sadly.

Gareth Soloway

3 Comments – Post Your Own

#1) On January 09, 2013 at 9:20 PM, boommeister (< 20) wrote:

Interesting points. Seems the sagacious Sir Paul McCartney was right, some people never learn. With the media doing its best to instill blindness, it seems we'll be in this cycle for years to come. 

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#2) On January 10, 2013 at 10:22 AM, L0RDZ (88.00) wrote:

Where do  you put  your money ?

Isn't  part of people's dreams the ability  to save ?  earn a  decent  return on money they sacraficed  in  not  seeking immediate  self  gratification.

Some people have little choice,  they have  pathetic  plans where they have  bad choices.

It's  reverse  robin hooding,  where the small are legally (maybe morally illegally  taken ) mugged,  it's  like thinking  you're  getting  the home coming queen as  your prom date, only  to find out that she is  really  a  he...   a  most disturbing thing  for most...


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#3) On January 10, 2013 at 5:54 PM, miteycasey (29.06) wrote:

Of course it works repeatedly.

People 'trust' the experts to do what's best for them.

It's like the wolf guarding the hen house.

The wolf eats a chicken once a week and the farmer is too lazy to invetigate and doesn't figure it out it's the wolf so he never changes.

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