The Losing Game: Why You Can't Beat Wall Street
by Stephen Edds, T.E. Scott
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Book Summary Information
Author: Stephen Edds, T.E. ScottEdition: Paperback
Audio: English (Unknown); English (Original Language); English (Published)
Published: 2008-12-23
ISBN: 0981937039
Number of pages: 200
Publisher: Hidden Truth Publishing
Product features:
- ISBN13: 9780981937038
- Condition: New
- Notes: BRAND NEW FROM PUBLISHER! 100% Satisfaction Guarantee. Tracking provided on most orders. Buy with Confidence! Millions of books sold!
Book Reviews of The Losing Game: Why You Can't Beat Wall Street
Book Review: Reveals a misunderstanding of equities and equity markets
Summary: 2 Stars
You won't have to read very far into this book to realize that the authors really do not understand equities. Their central contention that "you can't beat the market" is obvious incorrect. People beat the market all the time. Scott and Edds believe that the stock market is a minus-sum game. Actually it is a plus sum game with average historical returns around ten percent. They claim that only five percent of investors in the stock market make money. This is also incorrect. What they should be saying is that the small investor is at a disadvantage when it comes to beating the pros. Or that investors who frequently go in and out of positions pay a price for the motion in the form of commissions and fees, and to make up for that have to be very good at picking stocks and knowing when to buy and sell--or very lucky--in order to show a profit.
Here's an example of a misconception: On pages 17-20 Scott and Edds give examples of some hypothetic trades that show a minus return to investors. The fallacy in all the examples is that the final investor is presumed to be out the amount he paid for the shares. Quite simply the example is not continued far enough. On page 67 this fallacy is expressed thusly: "The last investor is left holding an empty bag." What is suggested here is that the stock market is a vast pyramid scheme.
However this is wrong. In the first place, in a pyramid (or Ponzi) scheme there is never any value added, no increase in land, capital or cash is ever realized except through that got by selling the shares to others down the line. In short a pyramid scheme is a non-sustainable business model.
In the second place, the overwhelming number of companies on the New York and NASDAQ stock exchanges, in stark contrast, have proven business models that have made literally trillions of dollars. The market capitalization of IBM today, for just one example, is many, many times what it was when it first went public. The value of its stock has doubled many times and the number of shares has increased enormously. That value is based on the enormous increase in what everything IBM owns is worth, including, land, property, cash, brand value, intellectual properties, expert knowledge, what it is expected to earn, etc. Anybody buying and holding IBM through all the doublings and stock splits would be very rich today indeed.
In the third place, in most cases the last investor hasn't been born yet.
I don't want to use the term naïve to describe what is written in this book, but on page 44 there is a chart showing how doubling $1 twenty times turns it into $1,048,576. I don't think this is news to anybody but the apocryphal king who agreed to reward the inventor of chess a grain of rice doubled for every square on the chessboard!
Another example of this surprising mindset is the "revelation" following page 129 concerning "The hidden truth about the Dow Jones index." What the authors reveal is that the average calculated from the Dow Jones companies "is a statistical average of 0.0027 percent of all of the listed companies." In other words that is the average of the 30 companies that make up the Dow Jones Industrials! (In truth a lot of people don't know this, but every serious investor does.)
On page 66 the authors tell us that when you buy a stock, "There is no guarantee you can sell your shares, no guaranteed price. The share has a non-predictable selling price." This too is not what most people would call a revelation! All investing involves risk of some sort.
On the same page it is written: "No matter how valuable you believe your share to be, unless you find someone to purchase it, the price is completely negotiable." The startling thing about this statement is that, taken literally, it understates the case. If no one is willing to buy your shares, they are worthless, period. The other striking thing about this statement is that the price of a stock is always "negotiable." That is what a market does: it allows investors to negotiate (through bids and asks) the price of shares.
The authors state again and again (there is a lot of repetition in the book, perhaps for emphasis) that when you play the stock market you are gambling. They even have a chart on pages 33-35 showing how casinos, the stock market and the commodities markets are similar. They have this right: playing any market is a gamble. And yes the odds against the uninformed gambler are more transparent in Vegas than they are on Wall Street. The difference is that in playing most casino games there is no way to win in the long run since the odds are against the player. It is just the opposite in the stock market. Historically the market has gone up overall. And the simple reason for that is "value added." Most companies traded on the exchanges create wealth and when you buy stocks you buy a share of that wealth.
This is not to say that everything in this book is askew. That most stock brokers are sales people first and not necessarily stock experts is true. In fact, most brokers are stock amateurs. If they really knew how to pick stocks they wouldn't need to make cold calls. It is also true--and here I want to repeat myself--the average investor is at a disadvantage against the seasoned and learned pros.
Finally the cartoon drawings by John Marr are very good.
Summary of The Losing Game: Why You Can't Beat Wall Street
This is the book you MUST read to understand why your successful financial future requires not trusting Wall Street!Now, more than ever, you need a book to navigate you through this financial crisis.
For decades, average Americans have been held captive in their financial lives by their limited knowledge of and an inherent trust in Wall Street, only to see that trust violated time and time again by a system that rewards greed and corruption.
The Losing Game explains why Wall Street is the largest casino in the United States, except the games are fixed and the house ALWAYS wins.
Retired entrepreneur and business owner T.E. Scott, along with writer Stephen Edds, uses well-reasoned arguments, unwavering logic, and common-sense insights to give readers a clear understanding of the stock market and commodity markets. They discuss how Wall Street is brilliantly marketed and designed to separate working families from their money without accountability or prosecution.
Scott excels in his description of the psychological war that Wall Street has implemented over the years using propaganda, marketing and the complexity of the market itself to keep us in the dark about where our investment money is going.
The Losing Game: Why You Can't Beat Wall Street shows the bottom-line basics of how Wall Street is scamming Main Street, with Congress and the media as willing accomplices.
In plain-speaking terminology, Scott presents a revolutionary perspective that uncovers the deceptive conditioning of the American worker to place their trust in Wall Street without question.
Would you take your retirement money to Las Vegas to gamble?
Why are you trusting your 401(k) and pension to a corrupt and unregulated market?
The Losing Game is a must-read for hard-working individuals willing to secure their financial future by ignoring the marketing of Wall Street, and by giving them the confidence to take control of their financial future.
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