Someone needs to switch to decaf

We’ve secretly put caffeine in columnist Paul Farrell’s decaf skinny soy vanilla hazelnut mocha chai latte. Let’s see if he notices

Remember Charlie Ellis’ famous 1975 classic: “Winning the Loser’s Game: Timeless Strategies for Successful Investing?” Like Napoleon Hill’s “Think & Grow Rich” everyone on Wall Street has read it. Well, guess what: Charlie failed us the past decade. Wall Street lost trillions, lost 11% of your money. Adjusted for inflation, Wall Street lost 20% of your money. Warning: Wall Street will do it again by 2020.

Another 20% (inflation adjusted) down-leg by the end of 2020? Yeah, I’ll take that bet.

You cannot win at Wall Street’s “Loser’s Game.” The past decade proves it. The house always wins in Vegas and on Wall Street.

The past decade proves it… and what about the nineties? The eighties? The seventies? The sixties? The fifties? The forties? The… okay, not the thirties… the twenties? The teens? the 1900s? The 1890s? Hell, the 1860s saw a 12% annualised return, and the 1840s were pretty rockin’ as well.

So why bet on the house? Why bet with the Wall Street casino for another decade?

Because sixteen out of the past eighteen decades have had positive returns, and the two “down” decades were both within spitting distance of flat?

Why? You’re betting in a rigged casino. Worse, they keep adding powerful new tools, scams and algorithms to their “financial weapons of mass destruction” arsenal, as Warren Buffett calls this mysterious $670 trillion global shadow banking world of derivatives. You cannot win.

Oh, god, here we go, he’s going to start ranting about how credit default swaps will blow up your pension fund.

Statistically, the odds now predict Wall Street losing another 20% of your money in the next decade.

Which odds would those be? ’cause I’ve already said I’ll take the other side of that bet.

The momentum’s headed down. So, what should you do? Sell all your stocks, ETFs, bonds and funds. Get out of commodities and gold. Sell.

And put the money in what, exactly? Canned goods? Aren’t those commodities too? (But give him credit: by saying “sell gold”, he’s managed to distinguish himself from the usual gold-and-guns crazies.)

What do you expects some kind of divine intervention will save you? Get real, consider the “Swiss Family Robinson” scenario.

…oh, wait, he is saying to put everything in canned goods. I dunno. The yield on canned goods isn’t so crash hot. Is there anything this guy does like investing in?

Studies prove that nobody — neither Wall Street pros nor Main Street amateurs — can predict long-term trends. But we do know Wall Street’s high-frequency quant traders are making thousands of millisecond bets every second gambling on short-term shifts in volatile markets.

See? He likes investing in high-frequency stat-arb hedge funds! (He seems to be absolutely convinced that HF guys are taking all of his hard-earned, so that’s where he should be putting his money.)

Eight reasons Wall Street will lose another 20% in the next decade…

Whatever; whatever; whatever; that’s not right that’s not even wrong; whatever; whatever; seriously? Lobbyists?; whatever.

The Wall Street casino’s version of “Liar’s Poker” is a “Loser’s Game,”[…]

I thought the Wall Street casino’s version of “Liar’s Poker” was Liar’s Poker.

So again I ask you: Do you really want to bet on the market winning for the next decade? Do you really believe that stocks, mutual funds, ETFs, commodities and bonds will make a profit in the next decade after Wall Street’s miserable performance the past decade? Trust them, you lose.

Yeah. Yeah, I do want to bet on the market winning. Because while stocks were down over the decade, gold had a blinder (up 250% over the decade). Even boring old US Treasuries made 110% total return over the decade. Commodities as a whole were up. Aussie stocks were up 50%. Chinese stocks doubled (although they got there the long way, losing 25% between 2000 and 2005). The point is: diversify.

Gold’s just had a huge run higher, and it’ll probably have a pretty crappy decade. But stocks should do well. Bonds are a bit iffy, but they’ll still give you yield no matter which way they go. The point is, if you diversify, you’ll be less exposed to the vagaries of a single asset class (which is what this guy seems to be ranting about, even though he’s suggesting bailing on every single asset class except guns).

Okay, I know this whole post was a bit facetious. And I know Farrell and are just whoring for page-views. But I don’t think I’ve ever seen so much wild-eyed rubbish in one place before (with one notable exception). Seriously, Paul mate… switch to decaf.

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