How John Succo Works
Secondly, the way Minyanville works is going to inevitably cause some problems with some given the nature of how truth is "known". It is unfortunately a messy process (for a variety of reasons ranging from human nature to economic systems) with those in the know and benefiting trying to hide it and most others fearful of really knowing it. Those that truly seek it do so knowing they may not like it, but to their credit, persevere.
Finally the way John Succo works is not very cut and dry. I readily admit I have had my problems with authority, but I believe they were born not out of envy, but out of a resistance to what I believe is necessary to conform.
You see when I was young I was like everyone else in this business. I nearly became corrupted by Wall-Street (or maybe more accurately I once was but have tried to redeem myself). The corruption began with allure, which turned into trying to please the people I worked for and looked up to, which finally turned into being trapped by money and the need to keep making it. I was lost.
But I changed. There was no epiphany, but more of a long, winding, and gradual "growing" into a philosophy of what I now believe to be important. I won't go into it, but suffice it to say that the truth is very important to this philosophy. At one time I felt guilty about the way I was (I was no monster, but certainly no saint), but no longer. I also have learned that we are what we are today in part for the mistakes that we have made in the past.
Wall Street is a regulated monopoly. Broker-dealers are basically guaranteed spreads through government regulation: a broker dealer is typically levered 20 to 40 times and can borrow at a rate only slightly higher than Fed Funds and then lend that money out at higher rates. By far the most profitable area in a broker-dealer is stock lending. No other kind of entity can do this. A broker-dealer then takes these guaranteed profits and "risks" it in other endeavors. If they succeed, shareholders benefit. If they fail miserably, the government (taxpayers) pick up the pieces. I cringed when they repealed the Glass-Steagall.
The buy-side of Wall Street, mutual funds, hedge funds, pension funds, etc., in general add little value. The average mutual fund has underperformed the stock market over the last 30 years. There was no pension fund (under-funded is the politically correct term) problem until Wall Street began advising them and put them into too many stocks. This problem is getting worse not better: many pensions are still using a much too high assumption on return on assets and are now using leverage to try to make up the short-fall (through hedge funds and other methods). Isn't it ironic that Jimmy Hoffa never ran an under-funded pension fund?
Minyanville is about sharing our knowledge of this Wall Street culture and the system under which it operates.
And that is why I write for Minyanville.
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