The Short Cut & How to Make Your Fortune in the Coming Financial Apocalypse

 The Short Cut &  

 How to Make Your Fortune 

in the Coming Financial Apocalypse

  - by -  

 Robert Farmilo  

Some years ago I invented a game called 'The Stock Market.'  It was a board game.  It was great, too.  My little board game had many features of buying stocks and 'investing.'  There were dividends and other cool stuff.  Gee, gosh, golly, I was about eleven when I made up this game.

When I was twelve, I invented another game called 'The Property Game.'  This one was loosely based on a game that a much older friend of mine had invented.  This game originally just had companies that we bought and sold while going around a board.  The cool part of the game was my much older friend had devised a way to include percentages into the game.  We had to pay income tax, and property tax, and other neat stuff like that.  And it was all figured out by percentages.

This game was great for me to play, and I had a lot of fun, too.  It drove in deep a considerable aptitude for percentages, and really understanding how they worked, or rather, how to work them.  Also, as I went on and added new features to the game, it became increasingly popular among an ever growing circle of people who enjoyed playing the game.  As the game became more sophisticated, each game would last longer, and longer.  And nobody seemed to mind!

Somewhere along the line, I tried to figure out how to introduce shorting the market into the game.

And so I became very familiar with this ultra bizarre concept of how to make money, a lot of money, while the price of something is actually going down.

Here is a question for you...Dear Reader:

When did you get to know about what selling short meant?  And all the related bits and pieces?

I know that if you ask the average Canadian what selling short means, they will not be able to explain it to you.  Even if you ask for a basic explanation.  And many would be challenged if you explained the concept to them.  It is so counter-intuitive to how MOST people think money should, and is, made.

Give it a whirl and see what happens.  Go on and ask a few people, here and there, "Oh, buy-the-way, do you know what the term selling short means?"

OR:  "Can you please explain to me what 'short selling' means...how does it work, exactly?"

A lot is written about how the average person is programmed to be a financial idiot.  And that the powers-that-be like it to stay that way, too.  Let's face it, IF we are all taken behind the curtain of the altar, and brought in to meet the real Wizard of Oz, it is going to cramp the style of the elite few who have their hands on the levers of power.  And basically one equation that most of us understand is that money does equal power.

And power equals money.

Here is my basic explanation of what selling short is all about, and it's miracle power to make you a lot of money, IF you guess right, or are a complete scoundrel and make your guess come true by manipulating market forces.  More about that later.

MY SIMPLE EXPLANATION:

• So, you borrow a cup of  coffee grounds from Joe.
  

• You make a deal with Joe to bring him back the same quantity and quality of coffee grounds tomorrow by 10 A.M.
  

• Once you are out of Joe's kitchen, er, office you immediately sell the cup of coffee grounds and pocket the cash.
  

• Then you wait until the price of the same quality coffee grinds drops below the amount of money you just made by selling the cup of coffee grinds you just borrowed from Joe.
  

• You wait until it is as low a price as it is going to be.
  

• Then you go and buy a cup of the same quality coffee grinds you got from Joe.
  

• And you go find Joe and return the cup of coffee grinds to Joe, plus maybe you give him a little bit more, as a sort of thank you.
  

• You keep the left over money.  Maybe you buy Joe a nice cup of fresh brewed coffee.

 FIRST FEATURED YOUTUBE VIDEO:

Jim Chanos is a legendary short seller and Founder of Kynikos Associates, the hedge fund management company he started in 1985. Sitting down with Opalesque.TV, he talks about his background and first great short idea in Baldwin United, which led him to believe he could successfully start Kynikos utilizing a short selling mandate.

Chanos gives insights from his 27 years in the business into the asymmetries between the long and short side of investing and talks about the drastic difference in psychology between successful short sellers and long only investors. While the actual skill-set (to analyze companies etc.) is identical, good short sellers must be capable to withstand the "giant positive reinforcement machine" that Wall Street has become. This is something most investors cannot do and why most of them, even hedge fund managers, fail on the short side.

 

OKAY, IT'S ME AGAIN...and you are safe.

Here is the thing.  In early 2008, I knew that the party was going to be over, and sooner rather than later.

I had a little bit of money in the market, and so I got out of the market and put my small little bit of cash into some simple interest bearing stuff that wouldn't be touched by the coming storm.

Somehow, I just knew, somehow, that the big, fat, bloated stupid idiots were going to pull the temple down around their own stupid...stupidity.

I know that there were just a few of us who knew, really knew, that the party was definitely over.

I had to wait a few months for the first lurch, and it came, and then there was a nice market correction, hooray!, and I heard a lot of heavy breathing, some of it was relief...and then the summer came, and a few more voices started to whisper about the pin and the bubble and how these two forces were going to meet conclusively.

THE PIN AND THE BUBBLE MEET! 

I know that for many of us groovy people, the idea that there could be 'people' who would, on-purpose, create a systemic problem so that they and a few of their close associates could make a colossal amount of money, well, that is JUST a conspiracy thing, and, we all know that Santa Claus and the Easter Bunny NEVER conspire together, especially when the Tooth Fairy is involved in the whole Gay Pride thing.

(what?)

Well, what I am going to write down next makes as much sense as the last statement I just wrote.

The pin that burst the bubble was an on-purpose event created by a few people who would make ENORMOUS profits by selling short.

IF you know something is going to happen 'cuz YOU are going to make it happen, this gives you an edge.  In this case it gives you a pin.  And the pin that burst the bubble was made in secret, and carefully put into the bubble so that the bubble would burst, and in that sudden bursting, some of the elite of the elite made so much money that your head would explode if you knew how much money was transferred from the pockets of a very large group of people into the pockets of a very, very small, tiny, little group of people.

This is the dark-side of shorting the market.  It is usually a crime.  In one sense, it is a variant of  'insider trading.'

What you need is an edge, too. 

So, what happened is that a particular sort of 'financial instrument' was created.  It is called 'a derivative.'

Oh, I know, you know, Old Aunt Suzie knows, that derivatives have been around for a long time.  Depending on how you let the drunken barber shave your world, (your view of reality), it could be a financial instrument as old as money...maybe older.

Now, here's the thing, SLAVERY is a sort of financial instrument, too.  And most of us don't want to be sold into slavery, and go work on Poppa Joe's plantation, picking cotton in the hot, hot, Mississippi sun.

But I am WAY off topic.  And more about SLAVERY in blogs to come.  I know you are going to love my predictive painting of our brave new world to come...and it is coming soon!

 YOUR BASIC MODERN DERIVATIVE:

This is a device that allows you to hide all the crappy junk you want in a very complicated legal document.  And if you have enough pull and clout, you can get various bond rating agencies to give the crappy junk a nice seal of approval, get the coveted triple A rating.

Thing is, most people INSIDE the game didn't even know what was in just one derivative, let alone the millions of derivatives that were being sold.  IF you took the time to unpack just one single derivative, you would soon discover that a multitude of financial sins were buried inside the tight, small, black print.  The triple A rating was a nasty lie hiding a truth too unpleasant for most people INSIDE the game.  So you learn to not ask too many questions, and keep to the party line, and push junk.

Along the way, a new fun financial instrument was created to make things even more fun for the few.  It was a form of 'insurance' to make bets with.  I could buy a 'guarantee' that a derivative was going to be okay.  Santa Claus and the Easter Bunny and the Tooth Fairy made a deal.

I could even buy some 'insurance' on how a deal would go, even when I wasn't actually one of the people involved in the deal.  I could make a bet on how it would go.  Yes!

The Ultimate Bookie had come to Crazy Town, and set up shop, and was hustling this stuff...and it was ALL PERFECTLY LEGAL!

And it was...SOPHISTICATED...don't you know.

 

What is so very odd about the number above is...that the world-wide total global economy is estimated to be:

GDP: $77.609 trillion (2014 estimate) 

or is it

$80.33 trillion (2011 estimate)? 

Anyway, whatever it is, (and what's $3 or so trillion dollars between friends?) when you compare the numbers...I mean JUST the volume of derivatives sold in one fiscal quarter of one year, say somewhere 'round $710 trillion, to maybe the top estimate of 2014, the ENTIRE world economy...all of it...at $77.609 trillion...hmmmm...do the math for me, will you CrimeStien?  What's that?  Comes out to...$632 trillion and some change: (A mere $391 billion...difference?)  How can this be?  What-the-bleep is going on?  Where is all this money?

YOUTUBE VIDEO:

LEARN HOW TO SELL SHORT ON PENNY STOCKS

 HERE IS ANOTHER CHART FOR YOU TO GAZE AT:

 (Source: Wikipedia)

Here is a very interesting article for you to examine:

http://risklearn.com/a-history-of-derivatives-a-3000-year-history-part-2/  

 HEY, FARMILO! 

WHAT ABOUT HEDGE FUNDS?

 DON'T THEY HAVE SOME SORT 

OF EFFECT ON SHORTING STOCKS?

We have all heard of HEDGE FUNDS.  These are NOT about gardening, or the hedge in your back yard.  This is a way to off-set risk.  IF I am reliant on a particular commodity, and want to guard against a price rise or a drop in price, depending on my 'what-the-bleep' risky EXPOSURE looks like, I buy some guarantees, I buy some of whatever it is at a guaranteed price.  I can even do this as an option.  I can buy the promise of a fixed price, and not have to take delivery of whatever it is that I have sort-of bought.

Now the term 'what-the-bleep' is a very technical term that is used in elite financial circles.

It is particularly in use among those who buy and sell hedges on bets.  So, let's say this was about a horse race, and I had a horse running in the third at Darlington Downs...and there was a lot of heavy action on the horse, and I wanted to lay-off some of the action, so I would maybe make some bets on some of the other front-runners, and spread my risk.

So what does a hedge fund have to do with making money on something that is going down in value?

Well, a lot, really.  Remember, a very few made a lot of money in the last Pin meets the Bubble.  And we are seeing how the bubble was somewhat patched up so that it could be reinflated.  And now the Bubble is being pumped up, again.  And the PIN is being carefully sharpened for the biggest and best 'pop' EVER!

And that is coming very soon.  Best guess is somewhere around 2015, maybe 2016.  So, to be specific, the financial thing is going to go into a very serious collision with reality.  There will be what is laughingly called 'a correction.'   This is when the very technical term 'what-the-bleep' is going to be on the lips of the many, and the few, too.  Except for the VERY few, and they will have another very technical term on their lips.  A silent, unspoken term.  A very smuggy kind of silence wrapped 'round their very technical term.

Here is another link for you to explore:

http://husky1.stmarys.ca/~gye/derivativeshistory.pdf

Just make sure you come back here after you finish exploring...

THIS blog article has received 1000's of readers since it was first published on this blog. I know that some of you are gob-smacked over the ENORMITY of the problem that speculation creates for your average Joe and Joan Lunchbucket...and, of course, for the supremely down-trodden in the less affluent corners of the world.

And yet, on the surface, me borrowing a cup of coffee grounds from my neighbor seems innocent enough: We shake hands in a bargain, and I live up to my end of the deal, and give him back the exact amount I borrowed...with a little bit extra as a way of saying, "Thank you, good neighbor!"

It's just that the game is NOT like that, at all. The trading of stocks for shorting is run through very powerful software programs that collect data near the speed of light...and for the average Joe & Joan...it's way too sophisticated. So they go and frig up their financial future by investing before tax dollars in some lame registered mutual fund...hoping that they are being really shrewd, and avoiding the tax man.

I know, I know...I sound a bit...weary and cynical.

IF you have been looking for a way to make money online, I invite you to try the link below.

I am looking for a select group of people who want to make a lot of money online, and want to learn from the best in the world...and not mess around.

It takes time to make money online...and patience, too. And you have to be prepared to be frustrated sometimes...so, if you're still looking for the fantasy system...don't bother with this link...BUT, if you want to FINALLY end the insanity and get set for life...this could be for you:

http://www.farmilo.MySalesSystem.com 

 Keep coming back to these posts...power packed, and thought provoking, too.

All the Best,

Robert Farmilo,

Online Guide