Main Street vs. Wall Street: Why Investing Is Not Speculating

I was recently talking with an experienced advisor about many investors' inability to comprehend capital markets. The advisor said that the majority of the people he deals with are concerned that the financial system is rigged against them - constructed by policy makers, regulators, banks, rating agencies and Wall Street firms for their own benefit.

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Comments (1)
Mr. Atkinson:
I respectfully disagree with most of the points you make in this article. The New York Stock Exchange is owned by its shareholders, many but not all of whom were at one time, seat holders. It exists as one of the many places that shares can be bought and sold. But the advisor you speak of was much more accurate than you in terms of the environment on the markets today. When you consider high speed trading and computer algorithms that are written to rapidly take advantage of slight price discrepancies that occur across multiple markets, even institutional money managers are at a disadvantage. And the exchanges don't exist for the deployment of capital from investors. The majority of trading on all exchanges is between existing shareholders. The companies received the proceeds of their offerings years before. When I buy IBM shares, IBM doesn't see a nickel.
I will concede to you that properly researched equity investing can produce highly attractive results over the long term. But to say the return will equal "the collective group's cost of capital" ignore the significant reality of the inefficiencies of today market and is disingenuous at best.
Posted by Stephen L | Thursday, August 23 2012 at 9:56AM ET
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