The Not So Secret Truth About Investing

The vast majority of investors today have been bamboozled with outright lies, outrageous claims and a web of misinformation that has been spun around the unsuspecting masses.

Only a small minority really knows the truth and, of those, an even smaller group truly understands the negative consequences to the average investor.

And who do you suppose is behind one of the biggest money grubbing schemes ever implemented in the entire history of the world?

If you guessed Wall Street and the mutual fund industry then you hit the nail on the head. And they’re not about to let you in on their multi-billion dollar secret either.

Put yourself in their shoes. If one day you stumbled across a flock of geese that laid solid gold eggs, would you take out a full page ad in the Wall Street Journal saying, “FREE GOLDEN EGGS HERE?”

No, I didn’t think so. But what’s happening today goes much deeper than that and is far worse than just keeping golden eggs to yourself.

Wall Street and the mutual fund companies have been keeping you in the dark for decades, all the while padding their already bulging pockets with more and more of your hard earned money.

They have systematically created a fantasy ideal that purportedly shows you how to invest correctly so that you can retire rich and fulfill your dreams and desires.

Unfortunately for those buying into the myth, the folks who are most likely to retire rich and fulfill their dreams and desires are the Wall Street and mutual fund insiders.

The average investor gets left out in the cold, saddled with high fees, underperforming investments and stuck taking risks they didn’t even know they were taking. In the end, they end up with millions less than what should have been rightfully theirs.

So how do these companies get otherwise intelligent people, from all segments of society, to buy into their games? It starts with the biggest lie of all when they say, with a straight face, that, “WE HAVE YOUR BEST INTERESTS AT HEART.”

Our beloved investment companies would have you believe that they are in business to make you money. To ensure you grow your investments as efficiently and effectively as possible with minimum risk. They’re your buddies who only want to do what’s best for you and your portfolio.

Surely they are the messengers of truth and have the noblest intentions for your well-being and money, don’t they? Ummm, no.

The reality is that they are a business and like most businesses are interested first and foremost in making money. Unlike most businesses, however, their products are usually detrimental to your well-being. In other words, if you knew how simple it is to invest on your own, you would no longer require their products – and you’d most likely do much better. Much better!

We like to think the big guys know what they’re talking about, but the fact is, the big guys talk about things to keep you dependent on them and their overpriced, underperforming products.

Do you remember the famous saying, “Give a man a fish and you feed him for a day. Teach him to fish and you feed him for a lifetime?” Well, that’s what they’re doing to the investing public. Except they’re not giving you the fish. They’re charging you for it. And charging you much, much more than what it’s truly worth.

If you want to shed the shackles of dependency and really start to make money in the stock market, then you need to learn to fish for yourself. Don’t depend on the fish sellers to tell you what you need to do (unsurprisingly they will tell you that you need more of their fish), but think for yourself and take control of your investments.

It can be one of the most profitable things you’ll ever do in your life.

Do you ever wonder how Wall Street bigwigs can make tens of millions (or even hundreds of millions) of dollars in one year? Ever wonder who pays for all of those full-page mutual fund ads running in expensive publications such as the Wall Street Journal and USA Today? Who do you think picks up the tab for the plethora of prime-time TV spots touting the latest mutual fund?

Could it be you? Well if you have any of your money in mutual funds, then it is you.

Make no mistake, Wall Street and its ilk would be flat-broke without the truckloads of money they pull in every second of every day from unwitting investors who buy into the myth that they should just turn their hard-earned nest egg over to these people.

You have to understand that the vast majority of investors are not as knowledgeable as you are. The fact that you’re reading this means that you want to learn and improve your chances of becoming truly wealthy through your investments. But the majority of people are ignorant and would rather remain blissfully unaware of the truth in order to stay in their comfort zone and not have to think about how poorly they are being treated.

And the big fund companies know this. And they take advantage of it.

They take advantage with snappy slogans and cherry-picked historical returns. They show beautiful people having fun on lakes and golf courses and imply that if you give them your money, you too can be part of this wonderful crowd.

And most of the investing public eat it up.

They don’t want to know the truth because it would unsettle them and would mean they actually have to take control of their investments and accept responsibility for their results (whether good or bad).

It’s far easier, and more comfortable, to have someone else make up your mind for you and have someone else to blame if you lose money (“hey, it’s not my fault and everyone else I know lost money too”).

The sad fact is that most people would rather be spoon-fed a nice sounding story that insulates them from reality so they don’t have to take responsibility for their current and future financial situation.

They can stick their heads in the sand and live in denial, justifying their poor returns and miniscule net worth by taking solace in the fact that everyone else is in the same boat.

Hopefully you’re not in that category. But even if you are, now would be a good time to extricate yourself from the unthinking masses and learn how to invest successfully for yourself.

Don’t let clever advertisements blind you to the fact that nobody cares more about your money and well-being than you do. Not Wall Street. Not Mutual Fund companies. And not even your well-intentioned neighbour who’s indirectly feeding you regurgitated Wall Street dribble.

The two things that Wall Street and fund companies are really good at are, first, keeping the typical investor in a constant state of turmoil by telling him that investing is too difficult for him to do by himself and, then, siphoning off loads of money from his investment and retirement accounts.

They spend lots of money trying to keep you in the dark by hiding the key issues. Don’t fall for it. Stop clinging to the naïve belief that Wall Street and the fund companies are interested in your and your family’s well being.

The one and only thing these companies are interested in is making money. Piles and piles of money. People gravitate to these jobs so they can make lots and lots of money. Period. They don’t go in thinking about how great it would be to help people realize their dreams.

And one of their greatest achievements is making people believe that they actually care about them.

How do they do this? Well quite simply they do it by smart and constant advertising, drumming the same message into the public’s heads over and over and over again. If someone hears something enough times, they eventually believe it to be true.

And where does the money come from for all of this expensive advertising (and lobbying, but that’s another story altogether)? It comes from the investing public in the form of high fees and other money-grubbing devices!

Wall Street has a vested interest in keeping you ignorant of the right way to invest your money. If too many investors took the time to learn the correct methods, Wall Street would be up the creek without a paddle. They’d no longer be able to pull in piles of money. And no money means no multi-million dollar bonus, no house in the Hamptons and no new Ferrari. That’s an undeniable fact.

Of course the balance has to be right. If you always lost money and never made any, you’d take your investments and go elsewhere.

But the fund companies know this and thus ensure that they only milk you to the extent that you still make some money some of the time.

It’s what psychologists call variable reinforcement.

Casinos and lotteries use it all the time. In short, it rewards the player on occasion, but not well enough to logically continue playing (add the fact that the big winners are publicized incessantly and you can imagine what everyone’s greed glands are doing).

And since people like to remember good things and forget bad things, the few rewards that are seen tend to carry greater weight in people’s minds than the multitude of times they didn’t win. So they keep playing in a futile attempt to hit the jackpot (or retire wealthy).

I hope reality is starting to set in. The big fund companies look after their own interests and quite often those interests are in direct conflict with yours.

The main thing to take away from this is to realize that you need to be in control of your investments. You need to take responsibility for your wealth. It’s much too important a decision to leave to the whims of others who don’t have your best interests in mind.

There’s more detailed information about how to build your wealth in the stock market the right way in the Pragmatic Investor book. Pick it up here to learn what you need to do immediately in order to escape from the Wall Street rat-race.

About Mark Hing

Mark Hing is President of Aptus Communications Inc., a software and consulting company that specializes in bringing proven investment strategies and methods to individual investors. He has published numerous articles, taught at colleges and large corporations, presented papers at a variety of technical conferences and been the editor of a monthly technology magazine called, "Computer Sense." He is also the author of, "The Pragmatic Investor," book.


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