It was Sir Francis Bacon who gave us the truism that “knowledge is power.”
And the 17th century English philosopher and statesman did so centuries before Wall Street was even conceived.
But the brokers, fund managers, and other pros who dreamed up the investment markets knew a good thing when they saw it. They embraced Bacon’s maxim, launched the first U.S. stock exchange in 1790, and spent the next two centuries transforming this country’s individual investors into scared vassals of the Wall Street elite.
And the big banks, brokerages, and other investment pros did this by never forgetting the simple precept that “knowledge is power.”
I see this play out on an almost-daily basis thanks to the endless streams of impenetrable reports that come from the bankers in New York or our elected leaders in Washington.
Most Main Street investors lack the knowledge to “decode” these reports, so they also lack the power to respond in a constructive manner.
Instead most of us just react – panic really. An upbeat economic report prompts investors to shoot stocks higher one day. But on the next, a seemingly conflicting report causes share prices to plummet.
Wall Street isn’t fazed by this whipsaw trading, of course: As individual investors, we must travel the road that’s owned by the pros. And that means we must pay a “toll” – in the form of a commission or transaction fee – with every move we make.
Source Money Morning
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