“Slap in the Face” Award: You’re the Problem

Steve McDonald
by Steve McDonald, Bond Strategist, The Oxford Club

Sorry for the blunt tone this week, but, believe me, just about all of you need this one.

It’s time for a general across-the-board good slap in the face for the small investor. That’s you!

After 30-plus years in the market, I can see what’s coming and it has nothing to do with which way stocks are going.

Why? Because we are back in that area of the market where the little guy’s mistakes make money for the big guys.

You heard me right. You are about to make a lot of money for the big guys. Take a look at the chart on your screen now.

How much plainer does it need to be? This is how the small investor thinks, and how the big investors, the institutions, gauge their buying and selling. If you, the average guy, have been plowing money into the markets, as the chart says you have been, the big boys are selling and taking your dollars with them.

It’s called the small lot theory and upside support.

That’s how it has always been and always will be. The little guy always sells at a loss when the market dips, and your dollars go right into the fat cats’ pockets.

The small investor doesn’t have the historical understanding of the market. He doesn’t understand how to use technicals. He doesn’t have the discipline or the basic skills required. And he is always 180 degrees out of sync with the market.

They buy when they should be selling and sell... well, you know that rest of that one.

Think I’m being a market snob? Another know-it-all, right? Well, take a look at this chart.

It shows how little you, the small investor, have made compared with institutions and the indexes.

One-half of what the big boys are making! And that is being generous! Most small investors lose - they don’t make anything.

Oh, and in case you were wondering, none of this is by accident. The major brokerages and banks didn’t start running their “it’s time to come back to investing” messages on TV when we hit 17,000 by accident. It is all part of a plan.

They know as well as I do that no small investor will ever buy low when the world looks like it is ending. Nope, not Mr. Red, White and Blue! He won’t buy until the indexes run up so much that even he can see that stocks do make money.

This is a national tragedy and one that has to change, or you will never make any money. There is a fortune to be made in stocks, but most of you will never see any of it.

So, it’s that time once again.

The indexes are through the roof and the little guy is finally buying in. We are seeing lots of volatility, and that means it’s time to give your money to the guys who keep their girlfriends in those nice places on the Upper East Side and drink $25 and $30 martinis in those neat bars in downtown Manhattan.

Go ahead; let the recent market jitters drive you to click on that sell button. The Wall Street bloodsuckers can’t wait to lock in their profits. And God knows they need the money. Girlfriends are expensive.

It’s time to start thinking like the bloodsuckers and buying when everyone else is selling. Make a small investor your next meal!

If you don’t, I can guarantee this:

You are guaranteed to lose money. An absolute 100% guarantee!

So, the line forms to the right for all those who refuse to change their ways. Here’s your well-deserved lose-some-more-money slap in the face. Of course, it’s nothing compared to the beating your brokerage account is about to take.

Please, please don’t do it again!

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