The rich will be richer and the poor will be poorer.

20 years ago it would have been unheard of for an investor to make 40% year-over-year returns. Even 20% year-over-year was a spectacular return. But nowadays, even many of the really big hedge fund managers (big funds are at a disadvantage because of their size)  crank out 50%+ returns year-over-year. So why is this?

The markets are spinning at a faster and faster pace. Computer trading and gung-ho money slingers are really wiping up the market. Successful investors can catch those sudden spikes, and as a result, make 30%+ returns PER TRADE. 30 years ago this oppotunity would not have existed. 30 years ago it would have taken months just for markets to move 20% in one direction. But nowadays, 20% rises/falls can be reached in less than a month.

The poor will be poorer.

The entire Western retirement “model” depends on workers investing a portion of their salary into their 401k or the market. For the baby boomers, that strategy worked. But now, state (and private) pension funds are bankrupt. People are increasingly having to pay more and more money to fund their pensions. So with another wave of people reaching retirement in 10-20 years, where are they going to get the money to retire?

They’re going to invest in the stock market, of course. Since the stock markets are a zero sum game (one winner for every loser) and the average investor always loses to the big guy, one can only come to the conclusion that there will be more money to be made by successful investors and more money to be lost by mom-and-pop.

Another conclusion.

Because of this prophecied extra money in the markets, the next bubble (end of the secular bull market) will be nothing like we’ve ever seen before.

Mullins |

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