capgain

Mr. Market Has Spoken

I had to read this twice; who is this guy saying all the things I've been saying for months?? And if he can see things as clearly as so many of us, why is Washington so tone deaf? And how much longer are we going to abide these "solutions" that so obviously are much larger problems in the making? Why is the law of gravity being outlawed?

It is as inevitable as tomorrow's sunrise.....failure is a critical component of capitalism. Washington's efforts to deny this by shoveling newly-borrowed money into failing enterprises will only lead to.......larger and more expensive failures!

There are trillions of dollars of private capital wisely sitting out this futile exercise. And you could measure in hours the time it would take for this capital to become the solution to our economic morass, but only after the megalomaniac amateurs in DC park their egos at the curb and get the hell out of the way. And how simple is the answer? Let's try this..........

Reduce the long term capital gains tax to ZERO for five years. The holders of all this side-lined capital will flood into the market to make smart investments free of a tax penalty. There will be an immediate creation of a market for all the "toxic paper" for which there is no market now. The smart money will do their due diligence in a competitive environment and end up buying up this paper for fire-sale prices, perhaps 10 to 50 cents of face value, depending on the long term tax free profit potential. This same capital will look to taking out the govt's positions in the viable enterprises that took TARP money.

In short, capitalism will return to our markets. Investors who put their money to work wisely, free of a tax penalty, will be rewarded. Those who are less wise will experience failure. Balance will emerge, and we will again have the opportunity to make our own individual mistakes!!

The Most Dangerous Place to Get Investing Advice

Thank you for such a well-written and simply stated article. It is chock full of basic common sense advice. I consider myself a fairly sophisticated investor and as I read this article I kept saying to myself..."I wish I had seen this forty years ago; I would have avoided so many stupid mistakes."

Your initial point re chartists is so spot-on! Whenever I see one spouting their "expertise", I see a driver steering his vehicle by firmly grasping his rear-view mirror!

Also, your advice to understand what a company does before investing is so basic and yet so often ignored. But it has served Uncle Warren well over the years, hasn't it? As has his advice to panic when others are greedy and be greedy when others are in panic.

You are, however, very forgiving of stockbrokers. My experience of them over forty plus years of investing is a bit less charitable. I define a broker as someone who will likely make you moreso.

Overall, a very good article. Thank you.