GCM HELPING YOU FROM EVERY DIRECTION                    

WHERE DID ALL THAT MONEY GO?

Let's assume that all stock market accounts were worth $1,000,000 in 2007.

Obviously, that was the "paper" value of the accounts.  But it is only when stock is sold that "paper" is converted into "real cash."

The entire stock market operates like the vile "pump and dump" scheme that you read about in the financial pages.  As new highs in account values pile up, the smart people still know that "what goes up must come down."  It's just a matter of "when," not "whether."   Other lesser beings get euphoric about their large account values and tend to think that they will go up forever. 

When a relatively few investors start selling to capture their paper gains, the market makers quickly get rid of what they had to buy by selling again.  If you are still holding your positions, your values are dropping due to the sales, and the money you once had on paper is rapidly transferring into the cash accounts of those who are selling.  When panic selling breaks out, your account values start dropping like a rock, whether over a few days or a few months. 

So the answer is quite simple.  Over the course of 15 months or so, that $1,000,000 lost 40% of its paper value and then sat at only $600,000.  The $400,000 you lost went into the hands of those who sold earlier.

The money didn't disappear.  It moved into someone else's account.  If your account had been properly managed by someone who knew what they were doing (placing "take profits" stop orders and selling short), you would have ended up with most of your 2007 account value... plus... additional profits from the short selling.  That's what I did starting in November 2007 and made 65% for all of 2008.

So my account went UP by 65% while yours went DOWN by 45%.  That's like saying "My million went to $1,650,000 while  yours went to $600,000."  That's a 175% difference in net worth after just one year of doing the right thing.

Now do you see why "buy and hold for the long run" is so RISKY?

                     Will the REAL bad guys stand up?

        1. The banks gouge customers with fees and higher interest rates.

              2.  The mortgage industry cheats individuals and investors.

              3.  The wealthy cheat the IRS out of billions each year.

              4.  Congress hoses everyone in sight with excessive spending.

              5.  Corporate executives rake off extravagant salaries and bonuses.

              6.  Ponzi schemes create untold misery.

              7.  Can you add to this list?  Email me and I'll add it.