For anyone who knows me, you know I consider all aspects of a person's life influences their overall health. Relationship skills, traumatic events, personal growth and self-efficacy, education, and financial literacy can have positive or negative consequences in the life of a individual and effects communities and our nation as a whole. So, I'd like to speak to the fears surrounding the stock market and how history is being repeated.
I was a homeowner during the 2008 stock market crash. The banking system and mortgage companies were approving loans that should never have been approved and money was flying fast and furious and the cost of housing was sky rocking. The rich were getting very rich, and everyone who applied was qualified to move in. Then it all came tumbling down. The stock market crashed, house values dropped, and people who had a home one minute were evicted their home the next. I was one of those who lost my home because I also lost my employment the same year. Fast forward to today...
If you have been paying any attention to the stock market, or if you have a 401k, IRA, or other type of investments in the stock market, you might be watching the numbers very closely as they are plummeting. The reasons for the drop are many and many people who have contributed to the drop would rather you not point them out as they take no responsibility for their actions and blame other things, like the war that is raging in Ukraine. When you understand the simplicity of the stock market you can see what is truly happening and I hope this may increase your insight and allow you to prepare for the future that inevitably will come. Those who are producing, and spending taxpayer's money are already telling us (average Joe's) that we may be "required to sacrifice for the next year and beyond."
One situation came to my attention that made me put finger to my chin and consider with a deep, "Mmmmmmm?"
I've always been a suspicious person and have trouble following the advice of others when I question their motives. I analyze, research, and explore the available information until I feel confident in my understanding. I dive deep and sometimes can get lost in the minutia. It's opened the doors to making some good and sometimes, not so good decisions. But I learn ether way, and this has made me more aware of the processes that drive financial decisions, how government, corporations, money managers, and banks are all interwoven to create the USA economy.
Recently, a billionaire who is one of the wealthiest money managers (MM) invested millions of his own dollars into purchasing stock in the company he manages--stock that was falling in value. This got me wondering why, so I hypothesized:
Let's say for argument’s sake, the above stock last year was at an all-time high. 2021 arrived with unprecedented spending by the government causing inflation and the above stock begins falling in value right along with the rest of the stock market (see photo of recent stock market summary). That's bad business if you are a money manager and have many friends and clients with large investments in that stock. Not wanting your friends or clients to pull out of the stock and further deflate the value of the stock, the MM purchases a large amount of stock with his rich friend's money, which results in the stock increasing in value. That's good for people who are already invested as they will see the value of their stock is rising. They may purchase more stock in hopes that it continues to rise creating a buy frenzy as others want to get in on the up tic at a time when everything else is dropping. But because the rise was artificially manufactured by the purchase made by the MM, the stock value will only rise so far and will flatten-out as less people buy. Having lost momentum, it will eventually return to the previous momentum of dropping in value. If the MM knows (and they do) that the stock is flattening out, they may call their friends and tell them to sell the stock. This is a good deal for them as they purchased the stock low and now sell high, which is the optimum way to invest. Who do billionaires hang out with? Other billionaires. When they sell off their stock it makes a huge dent. Sadly, for those not in the MM's circle of friends many have invested their life in this stock and will now be looking at their stock value plummet. This is bad. So they act in fear and start selling off their stock which drives the stock toward devaluation even quicker. When the stock has dropped to practically no value, MM (and his friends) can buy the stock on the cheap and "play" the stock market again. This is called "Insider Trading" and is illegal. It's what got Martha Stewart imprisoned, but it's legal for our government who is friends with the money managers.
For the past 100 years the rich have understood the game, after all, they invented it. Those who handle the money manufacture a problem creating fear and the solution is to raise taxes. Taxpayers give those in power the money to solve the problem they created. When that problem has lost momentum and the money is spent, another problem is manufactured, creating more fear, and the solution is the rich who offer solutions always get paid first. I hate to tell you, but the game is rigged, and the house always wins. Sure, you may see some increase in value and may profit by watching the market swings, this is good. But for the masses who have an IRA or 401k and who work a job and raise a family, who don't have time to learn the stock market game, they put their trust in Money Managers who make money "playing" with other people's money.
How can you change this? You must actively manage your money. This requires focus and a plan. If you don't know how to do this, I recommend DaveRamsey.com. He is a money manager who believes in helping people get out of debt. Become the one managing your money with purpose and intention because other's who want to take that money have their own purpose and intention that is only to benefit themselves.
The reality is that unless we make changes now, we will continue to live paycheck to paycheck, have little to no savings, have huge amounts of debt, and when the next pandemic comes, we will remain unprepared for the game that is being played on all of us.
"The rich rules over the poor,
and the borrower is the slave of the lender."
Proverbs 22:7 ESV