End of Game - The Final Fools?
One of the purpose of the markets is to separate the fools from their money.
There is no such thing as winning or losing when it comes to the money game. Money is constantly being transferred from the fools to the not-so-foolish. But then everyone is foolish sometimes and not so foolish other times. Investing is everyone's game whether you want to play it or not.
The Weekend Warriors The wealth of the majority of people comes from their career after expenses. Money is made through continuous devotion to work by accumulated experience and know-hows with matching ascending compensations. Most of us started with nothing and end up having something through time. Most people stick to this sure way of creating wealth. Then, comes inflation! The sure way can no longer apply since the items in the wish list gradually becoming impossible dreams. Supplementary methods to make money are being tried. The methods sometimes work but other time they don't. Even when they work, they seem so slow. Instead of being prudent like in pursuing a career, voodooism is applied. By skipping the learning process of try-and-error like educating the children, they seek effortlesssolutions happen to agree with their dreams. People like to be their own bosses. But when it comes to investing, they like to be told. They are told to diversify their money into real estate, stocks and bonds. They are told if they put their money into stocks fifty years ago, they would have made millions today. So everyone is busy building their diversified portfolios like they are told and sit there on weekends thinking one day they will be rich. On top of that, they will also tell you how their retirement plans will work out, $1,200 coming from the company pension, $1,100 from the government, another $800 from the government for the spouse and old age benefit of $230 each. Wow! Perfect plan! Just like that!
The Bush Pilots During the nineties, two people made it into the top fifty richest men in Fortune 500 by investing in the markets. It is true that money can be made apart from the conventional methods. Since 1970, there are unusual opportunities sprung up all over the world which enable millions becoming rich without the long-drawn time process of building wealth. In less than a ten years period, one can create more wealth than a conventional business which takes decades to build. In my life time, I have personally known only two people who created their wealth by speculating in the markets. They are passionate about the markets. They treat it as their careers. They monitor the markets even while on vacations. They'll get up at five in the morning and follow the markets as they flow through different time zones. They find a method and use it. Make money or even killings. When they lost, they think about their mistakes. They recoup and jump into the markets again. Their success is not just finding a winning method. Their continuous success depends on their untiring effort to seek ever newer methods. For they know one of the purpose of the markets is to teach them to be humblebecause there is no such thing as a single secret formula of success for everyone. To normal people, success or failure comes only once or twice in their lifetime. For the bush pilots, it can be as often as few times a day. The bush pilots learn their lessons quickly and often enough. It is not a life for most people. They are born to be bush pilots. And the unusual economical circumstances of the past 30 years make them into heroes. (Note: Hero in the markets is someone who is still alive to enjoy their glory!)
The Certainty
Powerful Government Policies It is a certainty that government policies are powerful to start with, since they control the money and the armed forces. Without either one of them, a government cannot function.
It is a certainty that government policies always end in failure. The only reason that one cannot spot the failure in an obvious sense is because there are no parallel competitions. Government functions are always monopolies. People would accept the poor postal service because they dont have another one to choose from or to compare the service to.
It is a certainty that all government policies are heavily influenced by politics which are nothing but propagandas of false promises, rather than on pure economic sense. A good example is welfare policies that fools everyone into thinking everyone deserves the same not by working for it.
Natural Economic Force of The People Therefore, it is a certainty that, except for disasters from mother-nature, government policies always result in the opposite of its original intention. Government wants to help the poor, only to plunge more people into the category of poor. Government wants to help the economy by printing new money, only to create inflation depleting people's buying power.
As much as government policies may help dislocate resources from their normal directions navigated by the natural supply and demand of the people, individual citizens in daily livings still control their own decisions. The simple decisions such as looking for alternative replacements due to higher prices; cutting back spending when money is exhausting; saving for future purposes; industries expanding to satisfy increased demands; black market thriving to counter government created shortages(e.g. cheap cigarettes, cheaper foreign goods) and demand of thrifty consumers; .., etc.
It is as normal as nature that the economic forces will assert themselves back to all the right places. Man-made distortions can only last a certain period. An economy cannot survive on illusions of everyone being rich. It is a certainty that one of the purpose of the markets is to distribute wealth according to dedicated hard work and savings as a rule of thumb for prosperity.
The End Of The Game Borrowing to invest only works in businesses. Entrepreneurs risk their capitals for their ideas. Lenders assume risks of their capitals for calculated returns. Each involves in the same risks with different outcomes whether the ventures are successful or not.
Western nations have been living on borrowed future for over one hundred years. Citizens borrow to enjoy their dreams of higher standard of materialistic living without waiting for the outcome of their own fruits of labor. Governments-federal, regional and local, use future tax incomes for borrowing to advance the social dreams. In the past one hundred years, there were numerous recessions and even depression. Before each downturn, the economy was hyped to a climax with its borrowing binge from money creation. The devastation was soon forgotten each time as the government supplied yet larger quantity of new paper money. Hong Kong, as the freest country on earth with least government regulations, has gone through three recessions during the past three decades, 1974, 1981 and 1997. Each time is more severe than the previous one. Did the government or anyone learn anything from it? Hardly! With government power on one side and the voters' dream on the other, the citizens and the government collaborated. Looking at history, they fooled each other into the game of getting something for nothing quickly. Eventually, they both paid their prices in disastrous ways. In many countries, some even turned into human tragedies such as wars, and starvations. Canada manages to turn its finance into the most fragile state after forty years of welfare -worry-free future.
Common sense tells us no one can borrow to live forever. A country is not an isolated entity. A country consists of people, its citizens. No one escapes paying the price eventually. Meantime, bush pilots take advantage of government policies and economic reactions to get rich. Weekend warriors use voodooism to extend their dreams further.
Since the last worldwide depressions in the late 20s, the worlds' governments have been delaying the ultimate consequence by creation of new money. With each recessionary downturn, they have to create yet larger dosage of money to pump the economy up avoiding the total collapse of the system. It is like tidal waves, created by governments. One big one came and wiped out the shores. It subsides. Then the next one comes, in a bigger wave. The waves are the debts. Each rebuilding of the economy ends up in larger amount of debts on all levels of the economy. For the past twenty years, the debts are unprecedented in history, on all levels. Next wave can be the Tsunami. When it comes as no one has seen it before in real life or in history, the Weekend Warriors will be wiped out. I wonder how well the Bush Pilots will do.
And who will be the final fools?
2004
Muslim vs Christian
