WARNING: The following is not a recommendation to buy, sell or hold any financial instrument.
You guys know how I feel about the equity markets. I have zero faith in them whatsoever. Even when the system wasn't so seemingly near the brink of collapse, I wasn't into buying (or shorting) and holding. As a trader, I'd seen what market makers were capable of doing and it didn't take a rocket scientist to determine that the entire thing was a scam.
As usual, it's not that bad, it's worse.
It turns out that people (individual investors and managed funds alike) who are buying and holding stocks, might not actually own the stocks that they think they own.Darkside of the Looking Glass
is an interesting examination of Failures to Deliver and Naked Short Selling. As I was watching this, I thought, "This could only be happening on low liquidity, garbage stocks." Nope. It's happening on the big daddy, household name shares that make up all the indexes that matter. How would you know if you're holding an IOU for a share of stock or an actual share of a stock?
* Drum roll *
Sure, your brokerage account will show you the number of shares that you think you bought, and track the values, but you won't know whether or not you're holding an IOU or the real deal.
HAHAHAHA! Isn't "investing" fun!?
Confused? Perhaps the Money Honey Hair Indicator
is what you need... What the hell, it's only your savings and retirement that are on the line...More: This Seemed Somehow Familiar
Remember my post about working in that dodgy sub-prime paper mill
? That was essentially the same scam, except with mortgages! The Wall Street firm got suckers to commit to IOUs that they'll never be able to deliver upon, while at the same time selling these IOUs to greater fools in the secondary lending markets. Why was the firm so concerned with never having any of that paper on the books after the end of each month? It's called making sure that you have a chair when the music stops playing.Research Credit: samadhisoft.com