There should be no investor class in the first place; the existence of institutional investors at all is a major contributor to our current socio-economic reality’s absolute fuckedupness. I’ll start with my model of how I think things should be then point out the most significant divergences and their ramifications. I’ll finish by praying to whatever deity will listen for boulders to fall from the sky onto the heads of everyone who has ever gotten rich from institutionalized theft.
My ideal for investment is a wealthy man, or a group of organized people who together have enough money to fund an enterprise, putting their own money on the line to buy into a business or investment (real property or commodities) with which they are intimately familiar so that they understand the risks they are taking and so they are confident in the likelihood of success and factors which may contribute to the enterprise or investment’s success or failure.
This model provides a basis for sound, consistent growth by forcing investors to be EXTREMELY CAREFUL with their investments – that’s the principal component lacking from the current model. What institutional investors do is gamble. You can tell me all you want about SEC filings, blue sky laws, audit inquiries, and all of the other disclosure and regulatory regimes that exist, but these investors are NOT intimately familiar with the companies in which they’re investing. They’re familiar only with paper filings, usually fraught with misrepresentations. The institutions that consistently profit do so by cheating, whether through market manipulation (w/ government complicity and support) or computerized frontrunning or whatever other methods are available.
Nor are they gambling with their own chips, a fact which requires no lengthy explanation. Other people give the banks their money to manage, and it is all insured by the support of taxpayers. So it’s easy to see how the element of EXTREME CAUTION is here completely lacking, and in fact has been totally abandoned in a fatalistic orgy of spend-’til-the-big-one-hits (and it will hit soon if there is any justice in this world).
So on that note I send out my sincere prayers to God, Allah, Krishna, Vishnu, Wotan, Thor, Mercury, Satan, Baal, Tammuz, Jesus, Yahweh, Jupiter, Ares, Shiva, Athena, Zeus, and all of the many other gods I’ve overlooked that boulders fall from the sky and onto the heads of all bankers, politicians, insurers, and anyone else getting rich from institutionalized theft, and all of those who support them, and also pharmaceutical company managers for good measure. While I’m certain there are good people among these groups, I do not wish for them to be spared. I would joyfully give loyal service unto my death and beyond for the deity who can accomplish this for me.
In all sincerity,
Mike Brewster