The markets are broken.
And what has to be done to fix them likely won't get done. That's because the folks capable of fixing them are actually captives of the folks who like them the way they are.
That's the bad news.
The good news is, if you understand what's wrong and who's responsible, you can actually make a lot of money playing the game the way it's been set up.
Let me explain.
First of all, what's happened isn't by some grand design. There is no great conspiracy to screw the public. (Not this time.) Rather, incremental changes in various corners of the capital markets manifested innumerable unintended consequences.
The net result is this: Our capital markets aren't functioning for the greater good of the economy and the nation. And the public is getting screwed. But you knew that.
The markets have become a kind of stacked deck in a rigged card game.
A game being played by a bunch of whispering pros against mostly deaf, dumb, and blind amateurs (yeah, I'm taking about too many people you know) in a shady casino overseen by pit bosses who work for the house – which is owned by the pros who set up the game in the first place.
I'm not going to break down what the incremental changes were that got us here. I've done that over innumerable articles I've written for, Forbes, Wall Street Journal's MarketWatch and right here.
This isn't about how we got here. This is about proving where we are now by means of a kind of grand supposition that hopefully is going to open your eyes. It's probably going to scare the you-know-what out of you.
Earlier I said the public is getting screwed, but you knew that.
How do I know that you know the public is getting screwed? Most people are out of the market. They are either on the sidelines or out of the game for good. They know the markets are a casino, and most people have come to realize that they have no idea what the game is, let alone how to play it.
And that, children, is the unhappy ending.
Precisely because the public is so leery of losing their shirts and knickers in the strip poker club, investing is a thing of the past.
Long-term investing is dead. Long live short-term trading.