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A way the wealthy can rig the economy: 1) Right now, the richest 10% own 84% of all stocks 2) Public companies take out huge loans in corporate bonds 3) Do stoc
by HashThis 7y ago
A way the wealthy can rig the economy:
1) Right now, the richest 10% own 84% of all stocks
2) Public companies take out huge loans in corporate bonds
3) Do stock buy back to raise the price of stock
4) The wealthy shift into privately companies with a bigger precentage of their wealth
5) Workers with their 401k are trapped in public companies, brecause of Accredited Investor laws, they can't invest in private companies.
6) Workers with their 401k are left with only public companies. The companies are forever heldback by servicing that debt.
6) Workers lose out of stock price gains.
- aeternus 7y agoIf you are confident in this scenario, then rollover your 401k into an IRA, enable options trading, and buy puts or short the companies that you believe took on too much debt. No need to be an accredited investor.
- cryptica 7y agoThis is not a good idea because with shorts you need to time the market correctly... Irrational markets can survive for years and shorts cost premiums, especially those with a distant expiry date. If you're not a stock analyst with inside info, you will not be able to get the timing right.
- aeternus 7y agoIf you are concerned about timing it right, or macro-economic swings, simply purchase a corresponding long position in an index fund / S&P 500. Options do cost premiums, but shorts typically do not. You can however even recover the option premium with a similar strategy by selling a matching option on the index. You can construct a trade that will make you money assuming your assumption is correct (that that company will underperform the market).