Now, see, this is precisely where the wealthy have the advantage.
I am limited in my options due to the (relatively) small amount of investment capital I have available.
Often, my "winnings" are all I have, as my initial capital is reinvested in my home or in a new car, or in something else.
That's one thing. Another is based on the opportunities offered to those of us who have tremendous cash. I have a very wealthy friend who was given a 10% guaranteed return annuity. No cost basis, no maintenance fee. I don't have enough money to get something like that offered to me.
I have another friend who runs a specialized mutual fund. His return last year was 5% - pretty good in that market. This year, it is 3% so far. I can't get in it because it has a minimum position of $1million.
These guys do well because they have information I don't have. That's okay, I'm not pissed about that. However, they also choose to prevent people from me from having the opportunity to join in their advantages.
This isn't a problem of the system. I'm sure there are plenty of places that offer opportunities like this to people at my level because the market requires competition at all levels. The real problem is that no offering like that for me will perform as well, because if it did, the manager would be snapped up by one of those high paying firms. That leaves less well associated people to manage funds for me and mine.
That's not a gripe, either. It's the system and I can appreciate it. It's what makes us better than the centrally planned economies, or even more mixed economies. I have the opportunity to get there.
But there is still a divide. And it isn't a knowledge divide in the sense of education. It is a knowledge divide in the sense of privilege, network, and accountability.
If my company goes bust tomorrow (it won't, but it could happen) I lose out on a huge amount of potential as my options become worthless. My CEO, on the other hand, loses far less. He has already made vast sums in income, and sale of options, than I could ever hope to. He'll have paper losses, but his lifestyle will remain intact.
Mine won't.
Again, this isn't a gripe - because I accept this as a situation that EVERY economy faces, centrally planned, mixed or market. Somebody always gets more. In addition, I accepted my job knowing the risks I faced in taking options.
But there is some question in my mind as to whether the people making the very large money realize that to get their returns of 10% a year, they will wind up bilking those who don't get the opportunity to make it...for whatever reason. So, in that sense, it becomes a question of accountability.
The system rewards success. It also rewards monumental failure. For those of us in between, it's about trying to make what we can, where we can, when we can. That requires alot of good planning.
Given all information, the best place to have your money over a long time frame is the stock market and its 11% annualized return over 100 years. That's a risk I can afford to take.
That said, I have some cash positions. But most of that is often used for unseen costs and circumstances (mostly personal that don't need explanation). I also own some annuities and a house.
But for real long term capital appreciation, I'm not likely to get better returns anywhere else besides the market. |
