When Wall Street crashed and sent the cue to the rest of the world to follow the usual reaction from the citizens was to call for regulation of the markets. Everyone likes thing how they were for the previous decade and a half. All you had to do was invest in the share market to guarantee high capital gains and income. It never seemed to occur to everyone that this is the way all good cons go down. A conman fans your own greed and offers you a deal which is too good to be true. The propaganda of the investment world claims buying shares is rational, sensible, astute etc. Picking the right shares is a scientific process which rewards most those who have wisdom and insight.

I’d say studying the published data on a company is about as useful as studying the tv screen above a roulette table which tells you the last 20 numbers. Both are entirely useless for predicting the future. On the news every night we cut to a “financial expert” who explains why the market went up, down or sideways during the day. It would be a revelation to hear one of them say “f***ed if I know”, when asked the question. How can anyone claim to know all the information driving any market? But they do, all day everyday. I send out the challenge to these people. After retro-fitting a few cliches to the day’s events, tell us what’s going to happen tomorrow and why. It’s never going to happen, because then we’d find out in a week that the “experts” know about as much as the family dog.

The argument put forward for the need for a share market it primarily that it is a great way for companies to raise capital. Sure, flogging off over-hyped shelf companies is one of the main activities. But I fail to see how buying a BHP share from another “investor” is keeping BHP afloat. It’s probably actually annoying for them to have to keep changing their mailing lists and have to endure a lecture at the AGM from a pensioner sitting on 23 shares.

IN Catch 22, Milo takes over the whole war by offering everyone he corrupts a “share”. Eventually a troublemaker confronts him and demands his “share”. Milo scrawls “One Share” on a piece of paper, hands it to him and walks away. Nothing more needs to be said.

I don’t own shares and have never believed buying shares was an investment, unless you call betting on horses “investing”. There’s a list of market bubbles and crashes as long as your arm. Why would you invest for your retirement in something which can lose 50% of it’s value in a day for no apparent reason? In an investment you have no control over after writing the cheque.

I believe the share market actually sucks capital out of the economy. With most of the nation’s savings tied up in real estate and shares the opportunities for productive businesses to raise capital are massively limited. Sure, a company can float on the share market and hand over millions of the proceeds to the merchant banks which push the shares onto their clients. But this process is not available to legitimate small and medium sized businesses. Once upon a time we had a “second board”, which was largely a bunch of spruikers, conmen and snake oil salesmen who sniffed a quick buck from gullible middle class investors.

I don’t see any logical reason to buy shares as a long-term investment strategy, unless you can cheat with inside knowledge. The more punters “investing” in the market the bigger the pot of cash available for the insiders. Last I heard, 98% of people who were stupid enough to become day traders lost everything in 3 months. But if you put them beside an “expert” they would predict the future at almost exactly the same rate of accuracy. But after 3 months one guy has all the money and the other guy is broke? The game’s rigged. How could it not be with that much money to be made so quickly and so easily?

The share market index these days is a defacto measure of our well being. “Share market fell 2% today” – we are worse off than yesterday and future is looking rocky. “Share market rose 2% today” – things are getting better, the worst must be over now…. I genuinely believe this is bad for you if you own shares. It’s like playing russian roulette. I’ve never tried it, but, I’d say it is bad for your stress levels.

We’ve also seen after the GFC how the market’s well-being is mistaken for the well-being of the economy. I believe markets are parasites on the real economy. There is a legitimate place for commodity markets, but they are highly manipulated by speculation. The profits made by hedge funds and speculators come from end users who have to pass the costs on to their customers. But as we saw in the USA, the priority was to bail out financial institutions somehow believing they would then lend the money into a shrinking economy during a housing price crash. Doesn’t seem fair, and they caused the problem in the first place. If anyone deserved to go bankrupt it was a company which brought the world down with it. A company like that should never have been allowed to exist in the first place.

So I say avoid investment in the share market. Instead, back yourself. Find the thing you like, or can do well and invest in it for the long term. If you have an idea for a product or a service do something about it. Get into internet marketing so you can talk to the whole world direct. Put the money you make back into the business and think 10 years ahead. Employ staff as soon as you can. Keep it all for yourself and avoid parnterships. Exploit tax opportunities available to companies for overall gain.

I once bought 20,000 pens for $1 each from a factory in China. They didn’t go very well and it took a year to sell them all. The average sale price was $2.20. I was apologising to the accountant about it when he stopped me and pointed out that we had doubled our money while the share market had returned 3%. He offered to buy 20,000 more pens and give me half the profits for selling them.

So what I considered to be a bit of a dud investment by usual standards had blown the masters of the universe out of water. It just makes you think that there have to be far more effective strategies than the usual passive system promoted for great profit by its controllers.