What’s The Real Reason It’s Becoming Easier To Invest?
Lots of you will know the story of Joe Kennedy Senior – (that’s JFK’s father) who claimed he understood that the rampant stock speculation of the late 1920s would lead to a market crash. Supposedly, he knew it was time to get out of the market when he got stock tips from a shoe-shine boy. Kennedy survived the crash “because he possessed a passion for facts, a complete lack of sentiment and a marvelous sense of timing”.
Timing isn’t all you need though. Back in the 1920s buying stocks could only be done through a stockbroker. These days anybody, anywhere, can buy stocks or invest via mutual funds or ETFs ( exchange-traded funds).
As if this wasn’t enough, Market Crumbs, argues there’s a compelling reason why new techniques to tempt people into the market frenzy, have suddenly appeared.
First off the blocks or interactive brokers who slashed their commissions on trading to zero – so of course all the other brokers followed – offering commission free trading. Even companies like Charles Schwab are getting in on the act – “to make investing easier and more affordable for everyone.”
The second innovation is fractional share trading – where you don’t even have to own the whole share. If you only have $20 to invest – but you want to buy some Tesla shares – you can now buy $20 worth. It’s thought that this has been one of the drivers behind the recent rise in the Tesla price.
The third rung of this ladder Is the SEC’s ( U.S.Securities and Exchange Commission) amendments which make it easier for people to participate in private offerings by amending the definition of an accredited investor.
Lastly, there is the new government initiative to give tax breaks on share buying. There are a few details of this but it is obviously designed to get more private investors on board the market rocket ships.
Economics 101 says “there’s no such thing as a free lunch.”
You have to ask yourself why – if the economy is in such good shape – do they have this urgent need to sell these crazily priced shares, and financial instruments, at way above their market value. And why now?
Insider selling in the US has reached a two decade high – and the 1% are beginning to dump their stock holdings.
Do the brokerages, administration officials, and SEC Need to find new buyers to take these overpriced stocks of their hands?
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