The recent massive increase in online investing started me thinking about the popularity of day trading that occurred prior to the internet bubble pre-2000, and the interest only real estate loans that occurred prior to the housing bubble pre-2007. Both events ended badly for many investors. The current stock trading by new investors, or should I say traders, will likely end the same way for many of them. Thinking about this made me wonder why people perceive and value the things they do in our society, when many aren’t good for us.
The recent pandemic and resulting government stimulus checks have left many with extra money and time. This has led to a considerable increase in gambling, whether it be sports or trading in the stock market-there really isn’t any difference. When you consider the fees and the odds, most will lose. It is common knowledge that the vast majority of investors including professionals fail to outperform a comparable benchmark index.
When I see commercials for online betting offering several hundred dollars of winnings for a bet of less than $10.00 on a bet that is guaranteed, it tells me they’re willing to invest a lot of money to get people to use their site. In other words, they think you will become a regular gambler, which of course is a win for them, and again, common knowledge that it will be a loss for most. Obviously the financial and gambling industries have a vested interest in making this seem attractive, but our government does as well.
Which leads to our government sanctioned gambling. Whether it be city, state, or our country- we are being used for tax revenue. The title of this essay speaks the truth about our government leaders’ lack of concern for the citizenry. Smoking is banned in all public buildings except certain casinos. It’s the hypocrisy of our elected officials choosing who is protected and who isn’t for an extra dollar of tax revenue at casinos. State and federal lotteries are another scam perpetrated on the public, again common knowledge that the odds of winning a major jackpot are astronomical. A quick Google search will show that most lottery tickets are purchased in lower income zip codes and by people whose lottery ticket expenditures makes up a higher percentage of their income. So, when your favorite politician or local casino brags about all the fine work the tax revenue collected from gambling is doing for you, think about where that money came from. How much of it would be necessary if people just hung onto the money that they already have?
Investing is not trading (gambling), and long-term investing has the potential through compound returns of helping people at any income save a significant amount of money. It does take some work to cut through all the misinformation, but the correct information is out there. Instead, we tend to avoid anything that appears difficult or tedious. It is far too easy to either ignore our investments, hand them over to a financial company whose fees will significantly lower your return or listen to some politician telling you the cards are stacked against you and you can’t do it on your own.
There are options available for almost anyone to invest long-term appropriately in a mix of stocks, bonds, and real estate at a low cost without a required minimum investment. The more one learns about investing history and theory, the more one also realizes there are no guarantees. This includes everything from your local bank or credit union to our government run social security. The bank’s returns are unlikely to keep up with inflation, meaning you’re losing money continually. Social Security is making promises on payments that it will be unable to make by around 2035. There will either be a reduction in benefits or an increase in taxes. Current citizens eligible for Social Security may get their promised benefits, but what happens to future citizens? They will pay higher taxes or get less; there is no way around it. Declining birth rates make Social Security more difficult to fund and puts increasing pressure on future generations. There are very few financial companies or politicians that are going to tell you the truth about either. You are taking risk – trusting someone else to handle your investments whether it be a bank, a brokerage service. or social security. When I hear a politician say they won’t gamble your Social Security on the stock market, I find it humorous. As if the way it’s being currently handled by them is any better, which is a permanent 23% loss on your payments or an increase on your children’s taxes.
Many politicians ruminate about the good old days when pensions were more widely available. Corporations offered them in the past along with municipalities, states, and the federal government. Many corporations realized they didn’t want to manage or be responsible for long-term pensions so mostly what is left are government pension funds. Pensions are only as good as the people running them and a quick Google search will show there is a huge pension crisis in our country currently. Many states pensions are underfunded and have made promises that will be impossible to keep. These perpetual lies keep people from honestly assessing their own future. Knowing there are no guarantees should inspire one to learn how to invest thoughtfully and conservatively.
While I’m on a roll, let’s talk about some of my other favorite most lied about subjects, starting with alcohol. Here we have a drug that is literally poison (it’s chemical name is ethanol), highly addictive, and causes incredible amounts of damage on society. On the National Institute of Health website there is a cornucopia of information on the dangers of alcohol, including it is a Group 1 carcinogen- meaning it is known to cause cancer. According to the NIH in 2010, alcohol misuse (their words) cost the United States $249.0 billion. This doesn’t include the $1.0 billion monthly that is collected by the federal government in excise taxes or the additional excise taxes collected by every state and many counties and cities. So, it causes a quarter trillion dollars in damages and the government recoups somewhere north of $12 billion. And yet over 85% of people ages 18 or older have drank alcohol. Why do we do it?
Well, one reason is it is currently romanticized through advertising from the beverage companies and particularly the onslaught of craft beer, local wineries, and brew pubs. We are inundated with ads daily on how hip it is to drink certain beers, wines, or other spirits. So, you have industry making big profits and our government collecting large amounts of taxes. This isn’t a good combination for finding out the truth.
Marijuana seems to be the next big revenue collection scheme. I’m sure the politicians thought if we can collect a billion a month on alcohol, just think what we can collect from weed to shore up our woefully mismanaged pension systems. According to the Centers for Disease Control (CDC), marijuana, like alcohol, has many negative health affects including addiction. Sadly, the younger you start the higher the rate of addiction. So, in the interest of collecting some taxes, let’s encourage more citizens to ingest something that is by and large unhealthy. I’m sure before this is done, the cost to society will rival alcohol. Again, you have a fast-growing industry along with lots of tax revenue for the government followed up with a dose of politicians and lobbyists to round out the newest scam.
This is probably my favorite big lie- food. The United States has epidemic levels of obesity, diabetes, hypertension (high blood pressure), and heart disease. These conditions were almost unheard of a century ago. Businesses including agribusiness and our government have conspired to feed us the biggest pack of lies of all regarding what we eat. Extra salt, a variety of sweeteners, oil or fat and caffeine is routinely added to food products to get you to consumer more. The United States Department of Agriculture (USDA) has members of agribusiness that help formulate their stances on nutrition. To a degree this is necessary but in the end, it is another recipe for a lack of truth. Our supposed USDA recommended diet has slowly evolved from the 4 food groups that included large portions of meat and dairy to a healthier plate, but it is still not optimal for health. Obviously, certain food industries don’t want their products to be labeled unhealthy and will go out of their way to fund their own studies and lobby the government to say otherwise. In the last century, we have dramatically increased our individual consumption of meat and dairy which is loaded in fat. Saturated fat seems to be the culprit behind these chronic diseases. On top of that, according to Pew Research Americans consume 36 pounds of cooking oil per person as of 2010, which is three times as much as the early 1970s. Cooking oil is the same as ingesting fat, regardless of type. Studies have shown that eating primarily a whole foods plant based diet has improved health outcomes significantly. Two studies in particular from Dr. Caldwell Esselstyn from the Cleveland Clinic and Dr. T. Colin Campbell of Cornell have shown me unequivocally that most of these epidemics could be reversed by simply eating healthier. Unfortunately, again you won’t get the truth from the usual suspects, but it is out there for anyone with access to a library, computer, or tablet.
All the above fit some medical form of addiction and yet they are all heavily advertised. Obviously, the businesses in these industries do not have your best interests in mind but neither does your government that collects tax revenue on each and every one of them. Seems like a conflict of interest to me. Does the government via their taxation make you think they subtly approve of this? Understanding the ramifications of our actions, just because it’s legal or accepted by society doesn’t make it smart. I have no problem with people deciding what is best for themselves. Everyone should decide how they want to manage their lives and what they want to consume, but if you take many things in society at face value, you will be disappointed in the results.
It’s not always easy to find the truth but it’s out there. Sometimes you must go through a lot of manure to find it, but in my view it’s worth the effort.. The more we accept being spoon fed information in our daily lives the less we will take an active interest in our own well-being. The only person who has your own best interest is you.