Thursday, June 20, 2013

The Big Secret Is.....There Is No Big Secret

In grossly simplistic terms, Tom Clancy's Rainbow Six is a book about an international counterterrorist unit and their exploits. In the book, an ex-KGB officer, bankrolled by an American billionaire, instigates a series of terrorist attacks in Europe. One of the attacks had Baader-Meinhof terrorists (a militant German socialist organization) take a very prominent Austrian financier hostage.

The KGB handler let the terrorists believe that the financier had an exclusive set of access codes to the international banking system which he used to great profit. The terrorists were hardliner Marxists and accepted his explanation without question. When the terrorists take the financier hostage and explain to him that they demanded those special access codes, it switches over to financier's point of view who then thinks to himself something to the effect of: oh my god, they want something from me that does not exist.

The reality is that there isn't some sort of secret set of access codes that allows a certain class of people (in the views of the leftist unwashed masses, primarily Jewish capitalists) to create huge profits for themselves by effortlessly manipulating financial markets. Success in high finance is a combination of luck, data analysis, and a fervent hope that your hunch is both correct and comes a split second sooner than another person's hunch. The end result might seem to be profits that come out of nowhere to the uninitiated, but that is never the case.

And that is precisely what those terrorists were. They were uninitiated. They had no idea how the real world operates. Unfortunately, many people in modern society have roughly similar views to those terrorists. Many are increasingly coming to the conclusion that the "game" is "rigged" by an all-powerful minority. The reality is anything but. There are powerful factions everywhere jockeying for a piece of the economic pie. And there are always winners and losers. But the human mind always fixes its attention on the winners, rarely the countless number of losers.

But for the average person, it actually isn't hard or expensive to become financially literate. The system is actually much more forgiving for average investors than for rich ones due to limits on tax-exempt investment vehicles and losses for tax harvesting purposes.

If you're a longtime reader, you know that I got started in the summer of 2007. I was just a rising sophomore in college then. And everything I ever learned about investing came from three books, a subscription to the Wall Street journal, and paying attention for about half an hour a day. Reading a financial newspaper day in and day out and you learn everything you need to know to invest properly. And you also start to see The Man's point of view and then you realize that there isn't a "The Man". There's just a bunch of people who have money who want to make more money.

The big secret is that there is no big secret. And for most people, getting rich is a very time consuming, laborious task that requires a certain amount of discipline that is beyond most people. Which is why most people are poor.

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