Why I said in 2003 that the share market will collapse for good!
Frank Pio Russo - February 11, 2016.
In 2003 I conceived the brilliant notion that the share market was a very bad system and was thus doomed to fail! I even went on and emailed the late share guru Renee Rivkin, when he was under attack by the authorities and offered to share with him the secret as to how the shares could completely collapse: I was sent a kind "thank you" note by his son.
The basic fact is that shares were only used by the 'initiates' and therefore there were always great profits to be made. That system was a bit similar to a supermarket worker who deviously marks down various stock items around the store, and then secretly tells his friends where to get these items and make a big fat profit! But of course the catch is that if 'the cat is let out of the bag' and everybody becomes cognizant with these special savings, it would all be unsustainable because there would not be enough to go round!
Likewise, whilst only the 'initiates' were involved with the stock market, there was profit to be made and it certainly was sustainable! But once every mum and dad would become investors, there would not be enough 'fat' to go round! E.g. not everybody could make 20% per annum whilst the banks were only giving about 4 or 5 per cent! Something had to give! That was my obvious conclusion!
Shares seem to be always going up ! However it's all 'make-believe' (now that everybody is involved in the market!) Basically the ruling concept is that of "punctuated equilibrium" where the market will constantly re-adjust itself downwards and people will see the greater value of cash... with the latter it's only the interest that can suffer, as the principle is not up for grabs!
Furthermore, with cash there is no conversion into liquidity to negotiate, and this removes all the anxiety giving real peace of mind! The reason for this is that whilst you've got the shares it's only paper money... you won't know what they're worth till you actually convert them and what usually happens is that people end up selling them at the onset of a crisis or share crash!
In conclusion, my honest opinion is that shares have had their better days... gone are most of their advantages... cash is back in a big way!
Frank Pio Russo.