Financial Securities - Why They Matter

A financial security is any publicly available instrument of investment. That sounds complicated but it isn’t. It includes stocks, like Apple or Caterpillar, commodities, like oil or live cattle, bonds (bonds are papers containing terms of a loan, payable to the holder) like US treasury bonds or bonds issued by a company, and derivatives of these, such as a paper issued by a company committing that company to buy a stock from the holder of the paper some time in the future at an agreed upon price, known as a futures contract.

The prices of all of these go up and down as people try to buy and sell them at the best price they can get. They can buy them in their own names, in the name of a company, or, crucially, in the name of a financial institution, such as a bank or a pension fund.

Most people will consider that these prices only affect the very rich, who directly buy or sell these securities, and that it is not a problem of other people. This is not so.

When you deposit money in a bank, or in a pension fund, there is a problem. In the future, the world will have grown and more people will be buying and selling more things, and the prices of things will have gone up. This means that if they just leave the money in a vault and wait until you get it out, it will be worth considerably less once you do. For this purpose, you could just as well bury your money in an vault buried in your garden, and it would be almost as safe as in a bank. The purpose of a bank or a pension fund is to use the money you give them to buy securities (they can also use it to give out loans, but this is a kind of security, it is buying a promis from the person you are lending money to that they will pay you a greater amount back in the future), so that when you go to take out your money, it can buy you at least as much as it would have bought you at the time when you deposited it, or if not, as close as possible.

So when you are depositing your money in a bank, or a pension fund, you are engaging the services of the bank or pension fund to buy securities in your name, so that when you retreive your deposit, it will be a larger amount of dollars than when you deposited it.

If there is a crash in the securities market, such as there is now, it is not only the rich that lose money, but anybody that has an account with a bank or a pension fund. This means that the things that go on in the world of business, such as the hike in oil prices, affect your money directly, because expensive oil means it will be much harder for the companies you are invested in to make money, and they will inevitably make less.

If your politicians are conducting policies that negatively affect the securities market, the world of business, then it may be the case that they are achieving some goal, like destroying Russia or reducing the amount of carbon in the Earth’s atmosphere. Buty it is definitely the case that they are causing you to have less money.

When the world of business is negatively affected by these policies, it is not only the rich that are affected and lose money, but everybody else, including yourself. You will have to pay a dollar price for these policies. In many cases, the very very rich will benefit, because they are in privileged positions with the government that conducts these policies.

smart money right now is holding cash and waiting for big dips. i’ve got a big chunk of an income fund that holds bonds from australia and emerging markets in southeast asia, as well as an s&p index fund that i buy in regular intervals, but i adjust the contribution depending on where the market is short term. i’ve got chunks in 2 mutual funds from dynatech and franklin and if you add them all up i have a chunk of cash in an envelope in a deposit box at a bank branch that’s about as much or maybe more than my holdings in all those. then i play with the meme stocks and the coins on robin hood while i’m taking shits or watching tv, and i get tips from a broker friend for things i have no intention of holding forever but that i may need to hold for more than a day, and i trade those actively in ameritrade because you can trade anything there so i may pick up a chunk of this or that and drop it on over a short term usually less than 6 months but the whole game is capital appreciation so that i can keep feeding the longer terms stuff. i like to think that all this stuff is common sense but i’m not sure that it is.

This element of your strategy is what is the point at the moment. You can be Warren Buffet, and are unlikely to be making money right now. Of course, anybody that followed my advice at the top of the collapse, the very top, has by now possibly doubled their capital. But that is neither here nor there.

The point is that a bank, or an investment firm that works with serious capital, like a pension fund, cannot afford to do some fancy specialized trading like this. It is too large of a volume of capital, first, and too much of a responsibility to too many people to take wild swings or take constantly shifting short positions. Their money is, in essence, wherever the market in general is. Because we are humans and entrpreneurs and generally have a lot of up and at them and a lot of thirst, markets have a tendency to just grow. Some win, some lose, but the business world in general grows.

Except when the government wages war on oil.

Except when the government wages war on business.

When they wage war on business, they are waging it on the guy that sweeps the floors as much as the CEO. They are hampering the ability of money to be made.

If somebody tells you that the war on Russia may or may not be saving the world but is having no effect on you, they are lying to your face, or idiots. Because $120 for something that takes maybe $10 to get out of the ground is a travesty. So Saudi Arabia and the big oil nations form OPEC and jack up the prices. $60, that’s fair, starving nations that find a source of income. So the fanatic lunatic leftists decide they want to erase Russia. For heaven’s sake. $120. Nobody can make money.

Oil taking a dive now. Maybe God heard my prayers.

Or maybe the recession is so bad now that even the sanctions can’t prop up prices.

its the wv v epa case. they’ll bring it back up to what the market will tolerate while advocating against investment in a diversity of energy sources.

Are you crazy? The EPA case? Are you back on the reefer?

By the way, mein friend, big oil is already heavily invested in “a diversity of energy osurces.” Because all of them are bullshit new age mumbo jumbo, they are costing them a dime and a half and themselves jacking up the price of oil.

The EPA case. The balls on you.

You think some guy just sits in a desk and decides the prices? That is an actual factual consumer of oil willing to pay that much, because the amount of people selling oil is now greatly reduced. Russia is, to put it in perspective, essencially as big a part of the world’s oil supply as Saudi Arabia.

They’ll bring the prices back up.

You live in legoland.

The movement of oil is now almost perfectly mirroring the movement in the S and P. What that means is tht I was right about option #2, and the recession is hitting people so bad that they are just having to sell whatever they have, inclzzuding the oil.

By the way, yesterday was the worst 52 week average price collapse for the S and P since 1970.

I hope you’re enjoying your fucking solar panels and ninja masks.

It’s like you had a lobotomy but they replaced the empty parts with cotton candy. What is wrong with you?

Just think about it in your brain dude.

If it is some random guy arbitrarily deciding prices to fool the poor people so they can win the EPA case, how did I know it would happen IN JANUARY?

Maybe I’m the guy setting the prices? Like George Clooney in that movie, the backdoorman that they hire?

This is an email I got today from Air Canada.

Did the EPA case do that? You nut?

By the way, have you read some of the briefs for the EPA case?

It’s insanity what these communists want to do.

What happened with you? That along the way you forgot the meaning of shame?

Thankfully, sane people are back in charge. I doubt the Supreme Court will allow that monstruosity to pass.

look at how crazy it made you for me to suggest that people should work on alternative forms of energy

It is certainly admirable how calm you are in the face of a collapse not seen since 1970.

i’ll be fine

I guess you’ll wait for CNN to cue when you should start becoming outraged. They’ll have picked an appropriate fall guy by then.

i dont even have cable

I see. They implanted the chip already?

yeah man implanted chips. totally. that’s what happened