Money Movement — Wall Street vs Main Street

News outlets everyday talk about how rich get richer and poor get poorer.

They say money has power to turn things around, This is best shown in Wall street where a stock would keep on rising up irrespective of fundamentals. Anyone remembers Enron ? It’s easy to see in rear view mirror that there were problems with the companies in first place, however then why no analyst, brokers shout it out — well no one cares if they are making money.

Wikipedia tells about various kinds of prevalent investor frauds:

  • Pump and dump schemes, involving use of false or misleading statements to hype stocks, which are “dumped” on the public at inflated prices. Such schemes involve telemarketing and Internet fraud.
  • Chop stocks, which are stocks purchased for pennies and sold for dollars, providing both brokers and stock promoters massive profits. Brokers are often paid “under the table” undisclosed payoffs to sell such stocks
  • Dump and dilute schemes, where companies repeatedly issue shares for no reason other than taking investors’ money away. Companies using this kind of scheme tend to periodically reverse-split the stock.

These kinds of scams hurt the people who are most vulnerable. They watch the TV hosts, media outlets praising the company, watch the infomercials how the stock is the next big thing in world. When someone is bombarded with this kind of information from all directions, people tend to have second thoughts about themselves and fall prey to real things going around.

A recent example can be seen in this interview 7 months back

and now just 2 days back, Same CNBC say

Honestly, we need to get proactive about these things and stop using rear view mirror to “Explain” things, else the below picture would soon be taken in color and then everyone would say “ I told you so …”

Great Depression’s Picture — Would this picture now be taken in color ?

This thought intrigued me and I started looking for developments in this space, Two of the below initiatives from Nasdaq and TINO IQ looks very promising.

Let’s hope that before dilbert makes a cartoon on how foolish and gullible was main street in investing, we all can start investing objectively in global markets knowing someone has our back.

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