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Here's the thing that matters now.
Until things change (which would have to be winter, because it will be a cold day in hell), the game is the game. The crony capitalists own it and make the rules, and the only way to beat them is to join them.
I don't mean join them literally; I mean play the game the way they do. Make money the way they do.
In general, crony capitalists are all "renters" of financial assets. They're all playing the markets. It's the game they know best and own lock, stock, and barrel. So, anyone wanting to ascend the wealth ladder has to be in the game.
Today, I'm sharing how to play this rigged game… plus responding to my favorite reader comments.
Four Positions to Have in Your Portfolio
The easiest way to play the market is to buy the whole market.
I recommend doing that by buying an exchange-traded fund (ETF) that tracks the market. Whether you prefer the Dow Jones Industrial Average as your barometer of the market, the S&P 500, the Nasdaq, or some other benchmark, there's an ETF for you.
SPDR Dow Jones Industrial Average ETF (NYSE Arca: DIA) follows the Dow, SPDR S&P 500 ETF (NYSE Arca: SPY) follows the S&P 500, and PowerShares QQQ Trust ETF (Nasdaq: QQQ), which tracks the Nasdaq 100, are all good choices.
The system protects the big banks, coddles them, feeds them capital, and applauds their rising profitability… And, when they get caught doing something criminal, they just pay a toll and get back on the highway.
So, own a bank. Or two.
I like Wells Fargo & Co. (NYSE: WFC) – not because it's "clean." It got caught opening up accounts for people who had no idea their signatures were being forged on account-opening documents. All that to the tune of millions of accounts. For what? A few million bucks in fees? A few promotions? A few bonuses? Some stock options? The answer would be, yeah, all of those things. Proof that they're criminal enterprises.
Wells Fargo isn't out of the woods on this one yet. But it's stock has been hit by the scandal and, of the big banks, it has the best dividend yield at 2.88%. I'd buy shares here and gladly add to my position if the stock falls. If the market drops and Wells has more fallout from the account-opening scandal, it's possible the stock could get down to $44. I'd buy it all the way down there and sit with it as a core position in my portfolio.
As far as the big banks getting broken up, unless you see steam from hell freezing over, don't hold your breath on that one. What we thought was going to be a 21st Century Glass-Steagall now looks like it's going to be a bunch of rule changes that benefit regional banks and community banks, who have been beaten up inordinately by all the regulations piled on the whole industry, thanks to the criminal activity of all the big banks.
Deregulating banks will be more about easing the burdens of smaller banks, at first, than wholesale gifting to the big pigs.
To play that game, I like buying a regional bank or a community bank.
I like New York Community Bancorp Inc. (NYSE: NYCB). NYCB's stock has been under pressure because it's been expanding by acquisition and moving away from the core lending (to NYC rent-controlled apartment buyers) tactics that made it so stable. There's talk that pressure on earnings might cause it to cut its dividend a little more (it's currently yielding 5.25%, according to Yahoo Finance), on top of the cut it recently announced. But the yield's still fat, and it has plenty of money to pay it.
The fact that the stock's been hit and is trading down at its 52-week low is another reason I like bottom-fishing here and taking a position.
If rules and regulations hammering smaller banks like NYCB get turned around, their profitability will go up. You want to own one.
And then there's technology.
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.