Wall Street unleashes its 'weapons of mass manipulation' on you

[Herman Munster]

http://biz.yahoo.com/cbsm/070129/5d3626dc318249a6abeabbd5171c3142.html

The driving force in this new phase is Barclays Global Investors. Here's how a recent Business Week feature described the secretive world of BGI and its team of 100-plus research PhDs: "BGI's ascendance highlights the coming age of quantitative investing, which seeks to purge money management of human fallibility through the rigorous application of the scientific method."
In less than a decade BGI has become the world's largest money manager with $1.62 trillion, bigger than Fidelity, Vanguard, Merrill and other traditional Wall Street leaders. About $1.1 trillion is in low-risk market-matching index mutual funds and ETFs. Much of BGI's remaining assets are in higher-risk market-beating arbitrage, hedge and alternative investment opportunities for institutions and high-rollers.

However, Business Week is quick to warn: "You and I can no more hope to do what BGI does than we can hope to rival such famously heroic stock-picking personalities as Warren Buffett and Peter Lynch. Quant-investing BGI style requires a fluency in applied mathematics as well as access to the prodigious computing power needed to continuously crunch the numbers for 10,000 stocks and 2,500 debt issues and execute thousands of trades a day. With 2,640 employees ..."

There's lot's more, but you get the picture: You and me and the rest of America's Main Street investors are outgunned and outsmarted in this game. We can't even speak their language, and what they do is cloaked in secrecy. And the odds against us are getting worse every year! So thanks to the new behavioral finance quants, Wall Street is more powerful than ever!

What can you do? Very simple: Since you can't beat them, don't play their game by their rules. Build a lazy portfolio. Then leave it alone. Let it do its job automatically. Build wealth doing something you love in a business or profession you enjoy, and spend as much time as you can with family and friends.

[UncleSepp]

1. Um... What they're doing actually makes sense

Using statistical analysis for stock performance predictions makes a lot more sense than going on somebody's gut instinct of truthiness. I for one welcome our new investment overlords... I mean, I for one welcome a rational, repeatable, mathematical approach to investment. It has the potential to smooth over dangerous psychologically-driven market swings that lead to instability and financial upset.

I do like your conclusions very much, though. This part:

"Build wealth doing something you love in a business or profession you enjoy, and spend as much time as you can with family and friends."

You can't get better than that. Money aside, that's what it's all about! Yes, one needs a certain amount of money to live without money worries being the overriding concern in life. Poverty isn't noble - poverty sucks ass. If you're at the level of financial comfort to be able to even play at investing, then you're comfortable enough to get serious about living life.


:hug: Here's a hug for you. I like what you have to say and I have exchanged one round too many with a fellow DUer tonight, so I'm not all that coherent. It's all good and all happy, but dude/ette, let go of the fear that others are trying to manipulate you, already! This just ain't all that scary.