Published August 23, 2012
Equities are the most fundamental investment vehicle, allowing you to take an equity ownership position in a company with the hope of profiting from their success. Is this equity investment losing its luster as a sound investment? Based upon my conversation with so many individual investors, the answer is a resounding, “Yes!”
Take for example the New York Stock Exchange, an institution whose history dates back to 1792. There was no computerized trading back then. It was a fair and orderly market. It was truly an auction market where fair pricing and trade executions were based upon honor and high standards among its members.
With the advent of computerized trading, otherwise known as “High Frequency Trading,” the stock market is anything but fair and orderly. It’s all about who is located the closest to a major exchange, known as co-location, and who has the fastest computer system. Both of these allow large blocks of stock to move through the system at break-neck speed thus putting individual investors at a grave disadvantage.
So, you’ve got these High Frequency traders chasing each other’s tails for milliseconds in order to get the faster price execution. This allows them to get in or out quicker then their High Frequency competitor.
My question is simple. Where does that leave us?
All we want to do is invest in good quality companies, Blue Chip companies, because that’s what our parents taught us. We were always taught that if we hold onto these Blue Chip stocks for the long term, we could potentially profit from a sound business model.
Unfortunately, the “Buy and Hold” strategy is dead for the most part, as these High Frequency traders have turned the stock market into a casino. And we know at the casino the house usually wins.
They claim that they add liquidity to the market. I think that’s Hogwash! I believe all they are doing is creating much more volatility. The “Flash Crash” is a prime example of this heightened volatility.
Big banks, high-frequency traders, dark pools, and their cronies are able to siphon billions of dollars from the system. In my more than 20 years as a financial advisor, I have talked to many individual investors. They are frustrated with the “New Normal” and want a better and safer way to invest and grow their hard-earned retirement nest eggs.
Could commodities be the answer? Many Wall Street analysts and hedge fund managers believe that commodities are a great alternative to traditional stocks and bonds. As commodity prices like gold, silver, grains, etc. continue to rise, you could directly benefit from these rising prices. As our US currency continues to debase and lose value, commodities will be one of the few safe-haven investments to be in.
The sad truth is that we’ve grown accustomed to this “New Normal,” and we shouldn’t have to. Take charge of your own retirement destiny. There are no cops on the beat, so you have to look out for yourself.
Call Gary and Ron Kornbluh today so we can tell you about a new and innovative account that was just approved in the state of Florida. Call us at 954-781-0087 or visit our website today because your retirement won’t wait for you.