Holmes Court: Tough times at the Wall Street Casino

It always amazes me the bullshit coming out of Wall Street.

This morning I was listening to CNBC on Sirius Satellite Radio as I often do when the market is tumbling. Even though my investments are taking a beating, I get perverse joy out of listening to the panicked voices of Wall Street’s cheerleaders.

Everyday, hosts like Joe Kernen, Becky Quick and Larry Kudlow trot out guests who are going to explain why the sky is falling. (That’s if the guests can get in a sentence before getting cutoff.)

“Why is the market falling off a cliff?” the hosts exasperatedly ask.

“Why, it’s Europe’s fault, of course!” “No, it’s the politicians fault for squabbling over the debt ceiling!” “No, it’s Obama’s fault for spending too much!” “No, it’s Fed’s fault for printing too much money!” “No, it’s because oil prices are too high!” “No, it’s because computes are manipulating stock prices!”

The blame game goes on and on, ad nauseam. When I listen to these knuckleheads, my brain feels like a pinball getting bounced from talking head to talking head. The reality is, trying to explain the market is a sucker’s game. No ones knows why the market is in the crapper.

Sure, some of the reasons cited by the “financial experts” no doubt contributed to the mess were in. But overall, the behavior of the market is simply too complex to be explained and understood by mere mortals. The market goes where it wants, when it wants, and we’re all just along for the ride.

After about a half-hour, the blame game can get tiresome. Fortunately, the humor begins when the experts begin to give their market predictions. This is when channels like CNBC and Bloomberg begin to sound a lot like handicapping shows.

“I’m moving into cash, Becky, because I predict the stocks will continue to fall.” “Larry, we’re moving into gold, it’s the only truly safe investment.” “Stocks are over-sold, Joe, so we’re buying.” “Carl, oil production is peaking, so we’re jumping into oil.” “The bond market is where it’s at, Maria.”

Of course, the king of market handicapping is Jim Cramer, host of Mad Money. Replace the stock symbols on Mad Money with NFL teams and you’ve got yourself an entertaining football betting show.

Much like most sports handicappers, TV’s financial experts, economists and stock pickers have about as much accuracy in their predictions as a monkey throwing darts. It’s not their fault. They’re simply trying to predict the unpredictable.

While these financial prognosticators are entertaining, it should be noted that some viewers watching them will make “investment decisions” based on their predictions. And they will inevitably lose money on those predictions, likely a lot of money on occasion.

I’m not suggesting there is anything wrong with this. People should have the freedom to lose their money in whatever way they see fit.

However, make no mistake, the behavior of investors is no different than gamblers betting at a sportsbook. Most are laying down money on some sort of investment vehicle (i.e. team) in the Wall Street Casino. Their chances of a positive return about 50-50, at best.

Unless you have some sort of inside information, Wall Street-style “investing” is about as risky as roulette. Yet, it’s an activity that is fully sanctioned, widely promoted and encouraged, and can be done anywhere with the click of a mouse, as it should be.

Meanwhile, most gamblers in America still have to jump through hoops to bet a few bucks on a lousy football game.

The persistence of this duality baffles the mind.

– Holmes

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