There are essentially two types of people left in the world as we head into 2012. The first type of person is struggling to make ends meet. If they have a job, they are focused on paying the bills and juggling cash flow. Or maybe they have a bunch of now overpriced assets that aren’t bringing in any money. In fact they are costing money to maintain. Much like feeding an alligator – they always require more, more, more.
What to do with them?
Hope and pray?
Cut them loose and move on?
These folks aren’t worried about investing because they have nothing to invest. If they don’t have a job, they are making ends meet anyway they can; moving in with family, living off the system, or engaging in “questionable” behavior in order to get the dollars they need.
And that’s all fine – there are always tough times and it’s the American way to get through them using whatever opportunities present themselves. You gotta do what you gotta do to put food on the table.
Most of these people were screwed by Wall Street and didn’t even know it. Maybe some of them lost money in the stock market. A lot of them jumped onto the real estate bubble and lost it all there – a bubble made courtesy of our friendly financial institutions.
The second type of person has cash. They just don’t know what to do with it. Maybe they sold a business, or saved prudently for years, or cashed out at their current company. The bottom line is, Wall Street hasn’t separated them from their cash . . . yet.
The stock market has been flat for a decade. Wall Street continues to peddle the dream of financial independence, encouraging anyone and everyone to buy and sell through their firms. Of course, they could care less if anyone makes money—they just want their cut of the transaction.
Or, more likely, they just want to find a sucker to sell their own stock holdings to.
“Love ya; mean it.”
Wall Street doesn’t exist to serve.
They exist to fleece.
Gone is the era of making money and then handing it over to the guys on Wall Street, who are only interested in selling the next sucker’s play or the latest get rich quick scheme. For the informed, there is no more throwing hard earned cash at something because someone from Wall Street said it was a good idea.
We are entering a new era of, to put it bluntly, distrust. People now are making the assumption right off the bat that whatever is being heralded on Wall Street is for suckers only.
So what to do?
It’s time to take responsibility for our own cash. Great investing ideas aren’t handed out as favors. They are kept in closely knit circles and aren’t advertised.
It’s up to us to find our own investing ideas and not rely on the kind-hearted spirits on The Street.
For now, the economies of the world are in trouble. There is no arguing that fact. While many companies are weathering the storm just fine, many governments are not.
So should we be betting on those companies that are doing well?
No; quite the opposite.
The money is going to be made in 2012 betting against governments.
The European Union? We need to change ECB to LOL.
I’m making bets that Europe will continue to struggle, and that’s why I’m shorting and staying short FXE, the exchange traded fund that represents the euro currency. It’s currently trading around $130.00 (which represents a Euro valued at $1.30). I’m looking for this to move towards $115.00 through the first half of 2012. This can be played by shorting the FXE outright, or by buying slightly in the money put options. These options can be purchased six months out or just play the front month and roll them over (sell the front month close to expiration and then buy the next month out).
This is a smart play in my book, and one that anyone can do easily.
But guess what?
Wall Street doesn’t want you to do things like “short the euro.” That’s their game, and they don’t want to share the pie with anyone.
Fortunately, there is a solution to that, too.
The next time they knock with a great investing idea, tell them that you are doing just fine, thank you very much.
And to not let the door hit them on the ass on the way out.
John Frederick Carter