Knowing how things got to where they are is one thing. Knowing what steps to take to arrest and reverse the widening income and wealth gaps in the U.S. is another thing.
Here’s the thing that matters now.
Until things change (which would have to be winter, because it will be a cold day in Hell), the game is the game. The crony capitalists own it and make the rules, and the only way to beat them is to join them.
I don’t mean join them literally; I mean play the game the way they do. Make money the way they do.
In general, crony capitalists are all “renters” of financial assets. They’re all playing the markets. It’s the game they know best and own lock, stock, and barrel. So, anyone wanting to ascend the wealth ladder has to be in the game.
Today, I’m sharing how to play this rigged game…plus responding to my favorite reader comments.
Four Positions to Have in Your Portfolio
The easiest way to play the market is to buy the whole market.
I recommend doing that by buying an ETF that tracks the market, whether you prefer the Dow Jones Industrial Average as your barometer of the market, the S&P 500, the NASDAQ, or some other benchmark, there’s an ETF for you.
SPDR Dow Jones Industrial Average ETF (NYSE:DIA) follows the Dow, SPDR S&P 500 ETF (NYSE:SPY) follows the S&P 500, and PowerShares QQQ Trust ETF (NASDAQ:QQQ) which tracks the NASDAQ 100 are all good choices.
The system protects the big banks, coddles them, feeds them capital, and applauds their rising profitability… And, when they get caught doing something criminal, they just pay a toll and get back on the highway.
So, own a bank. Or two.
I like Wells Fargo & Company (NYSE:WFC) – not because it’s “clean.” It got caught opening up accounts for people who had no idea their signatures were being forged on account-opening documents. All that, to the tune of millions of accounts. For what? A few million bucks in fees? A few promotions? A few bonuses? Some stock options? The answer would be, yeah, all of those things. Proof that they’re criminal enterprises.
Wells Fargo isn’t out of the woods on this one yet. But it’s stock has been hit by the scandal and, of the big banks, it has the best dividend yield at 2.88%. I’d buy shares here and gladly add to my position if the stock falls. If the market drops and Wells has more fallout from the account opening scandal, it’s possible the stock could get down to $44. I’d buy it all the way down there and sit with it as a core position in my portfolio.
As far as the big banks getting broken up, unless you see steam from Hell freezing over, don’t hold your breath on that one. What we thought was going to be a 21st Century Glass-Steagall now looks like it’s going to be a bunch of rules changes that benefit regional banks and community banks, who have been beaten up inordinately by all the regulations piled on the whole industry, thanks to the criminal activity of all the big banks.
Deregulating banks will be more about easing the burdens of smaller banks, at first, than wholesale gifting to the big pigs.
To play that game, I like buying a regional bank or a community bank.
I like New York Community Bancorp Inc. (NYSE:NYCB). NYCB’s stock has been under pressure because it’s been expanding by acquisition and moving away from the core lending (to NYC rent-controlled apartment buyers) tactics that made it so stable. There’s talk that pressure on earnings might cause them to cut their dividend a little more (it’s currently yielding 5.25% according to Yahoo Finance), on top of the cut they recently announced. But the yield’s still fat, and they have plenty of money to pay it.
The fact that the stock’s been hit and is trading down at its 52-week lows is another reason I like bottom-fishing here and taking a position.
If rules and regulations hammering smaller banks, like NYCB, get turned around, their profitability will go up. You want to own one.
And then there’s technology. Specifically, a tech company that manufactures cheaply overseas, sells its products everywhere (especially here in the U.S.), and has so much cash parked overseas it would blow your mind. It owes its success not just to its loved products, but to the fact that it is the posterchild for a company that hit it out of the park thanks to “trade deals.”
I’m talking about Apple Inc. (NASDAQ:AAPL). Own it, you won’t regret it.
Last, but never least… The market is a game and game boards can – and do – get knocked over. Because there’s always danger playing the market (unless, of course, you’re so rich you can buy more shares when there’s “blood in the streets”), it’s always a good idea to use stop-loss orders.
I like having a stop-loss order 10%-15% below where my stocks are trading. As they rise in price, I raise my stops. If the market tanks, I get taken out without getting hurt much, and look for a lower point to get back in.
That’s how the players play the game, and stretch that gap on folks who don’t know what the game is, let alone how to play it.
You’re a player now. Go get yourself some.
Questions I Couldn’t Help But Answer
“Eliminating the Fed while not impossible will still be complex…. It is not that simple. First, the nation still needs a central bank to manage the supply of money into the economy and the prevailing interest rates for stable inflation and economic growth. Second, a government [can’t] just take something it does not own… Third, history demonstrates that it is not a good idea to upset the bankers, they tend to create wars and overthrow governments when they don’t get their way. Eliminating the Fed is not an option, but an orchestrated buy-back in a civilized manner whereby the US government reclaims and fulfills its constitutional mandate to supply money for the great US of A is the country’s only choice.” – Andrew
I respectfully disagree, Andrew. We do not need a central bank at all. The monetary aggregates can be managed mechanically, by something as simple as the “Taylor Rule” or some other transparent, open-sourced metrics-driven algorithm. As far as the government taking something it does not own, it doesn’t have to. With the swipe of a pen, the Federal Reserve System became part of the “law” of the land. Another swipe of a pen is all it would take to wipe out the lawless monster everyone thinks is a branch of the government. What history tells us is that bankers have too much power – that’s the lesson we keep forgetting. Eliminating the Fed is definitely an option, one that should be exercised without fail.
“ONLY massive numbers of protests, calls, votes, rebellion will throw The Fed into the gutters. Overwhelming force. Will this be solved legally, peacefully? What do you think?” – Elliott
Elliott, I’m not an advocate of blood in the streets in any way, shape, or form, but I do like a good peaceful revolution. That’s what it will take to kill the head of the snake, the Federal Reserve System. A groundswell of mad-as-hell marchers, reaching the millions, marching on Washington until Congress has no choice but defang the slithering slime that backstops the nation’s biggest criminal enterprise ever is what’s necessary.
“Perfect, succinct analysis in this new age of alternative facts… Kudos, my friend, for telling the basic immoral Washington methodology.” – Ralph
Thank you. The fake news about what our country’s problems are is worse than disgusting, it’s criminal. Help me get truth out there, please.