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Rigged Money: Beating Wall Street at Its Own Game

ISBN: 978-1-118-09968-1
204 pages
December 2011
Rigged Money: Beating Wall Street at Its Own Game (1118099680) cover image
Today's financial landscape and what Wall Street doesn't want you to know

Rigged Money is based on one simple truth: Wall Street needs money from Main Street, not the other way around. The financial industry has convinced the general public that investing across different asset classes is the only way to protect wealth, but this is an outdated rule that no longer applies.

Since asset classes—small caps, large caps, international investments, gold, and bonds—now overlap when it comes to risk and volatility parameters, the diversification effect is gone. That's exactly what Wall Street doesn't want you to know—that the rules of the game have changed.

  • Risk Isn't Constant: Pie charts lie when it comes to accurately describing the risk of stocks and bonds
  • Dividends Are No Silver Bullet: They are designed to entice investors rather than to increase a company's value or your net worth
  • Buy and Hold is Dead: The financial world (and all the companies and securities in it) moves too quickly and is changing too often for this theory to hold true today
  • Gold Is Not an Investment: Gold is today's currency of fear, and this fear is driven by escalating government debt

An unflinching look at this new financial world, Lee Munson's Rigged Money arms today's investors with the simple, smart, and clear advice needed to level the playing field.

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Preface xi

Acknowledgments xvii

PART I Old School . . . of Thought

Chapter 1 Buy and Hope: The Scam? 3

Blame the Dutch! 5

All the Wrong Moves? 7

Time Is Not on Your Side 14

My Dinner with Burton 19

Chapter 2 Lie of the Pie 23

Today’s Outrage: Pie Town 23

The Original Pie Crust 26

Breaking Eggs, Then the Entire Kitchen 29

So, What Is Next? Risk Budgeting! 34

PART II Wall Street: The Set Up

Chapter 3 Mayday 43

How the SEC Let the Dogs In 43

Mayday, We Have Soft Dollars! 45

Soft Dollars 47

Death of the Stockbrokers 49

Short History of Advice 51

Avoiding Fleas 55

Chapter 4 Research by the Pound 57

Research by the Pound 64

The Report Trail 67

Chapter 5 401(k): Gun to Your Head 71

How We Became Traders 72

The Mutual Fund Supermarket Is Born 76

No Stockbroker Is an Island 80

Chapter 6 Liquid Casino 87

Liquidity Is God 87

Why Dark Is In 94

When the Lights Go Out 97

PART III Surviving the Rigged Game

Chapter 7 How Wall Street Sees You 101

Is That Really What You Want? 101

Taking a Strong Opinion Too Far? 104

Cramer Is Driving Me Crazy 106

How a So- Called Pro Fools Himself 108

Other Distorted Images 109

Chapter 8 ETFs: Fact or Fiction? 113

Selling the Sizzle 116

Getting Down to Earth 118

The Audit Part I: Sectors 119

The Audit Part II: Grain Wars 122

The Audit Part III: Junk Is Garbage 125

The Final Audit: We Have a Winner! 127

The Virus Goes Airborne 130

Chapter 9 Gold Is Money 133

Historical Use of Gold 137

Gold Is Standardized 142

Control versus Live Free or Die 144

Brave New Non- Pegged World 146

Chapter 10 Options: Really? 149

Do You Want Them? 149

Practical Strategies 151

Chapter 11 Dividends: A Conundrum! 157

The Pitch 158

The Early Days 160

Growth Breaks Out 164

What’s Next? 167

Chapter 12 The New Scam 169

How Did We Get Here? 170

History Repeats Itself 173

Further Down the Rabbit Hole 179

Credit Unions 185

Corporate Credit Unions 188

Afterword 191

Notes 193

About the Author 197

Index 199

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Lee Munson worked as a speculative traderduring the dot-com boom and bust until he had an epiphany and began to question everything about his approach to investments. Realizing that Wall Street is a game that isn't always played to give investors a fair chance at winning, Munson went on to form an asset management firm, Portfolio LLC, in New Mexico that is ranked as one of the fastest growing firms in the country. A frequent guest on CNBC's The Kudlow Report, he is a contributor for TheStreet.com and is quoted in numerous financial publications such as the Wall Street Journal, SmartMoney, and the Kiplinger Report.
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November 21, 2011
Wall Street Beware, We’re on to You

 

From the halls of Congress to the legions of angry people part of the Occupy Wall Street movement, there is an overwhelming sense of disappointment and annoyance at America’s financial system. The question now is how to reform and change the system to benefit the 99%, rather than an entrenched, entitled class.
Lee Munson, a Wall Street insider turned entrepreneur and gadfly, takes these questions on in his new book Rigged Money: Beating Wall Street at its Own Game (Wiley, $29.95, December 2011).
Munson starts with a simple premise: Wall Street needs Main Street. What needs to change, he argues, is our desire to allow Wall Street to sell us products designed to solve problems we don’t have. Wall Street survives only if their clients succeed – the false sense of self-interest and self-preservation will only lead to more MF Global, Bear Stearns and Lehman-style meltdowns.
“Rigged Money” is Munson’s investment manifesto, and describes the same constant-risk process that Munson applies to his client’s portfolios. The book is a wake-up call for investors and financial advisers everywhere.
“Investors need to make sure that they take advantage of calm markets,” Munson says, “while pulling back when things are more volatile, like this current market environment.”
“Rigged Money” lays out strong opinions on key issues in the investment and financial advisor community:
? Advisors are Stuck on the Same Old, Bad Methods: Pie charts lie when it comes to accurately describing the risk of stocks and bonds
? Dividends are a Venus Fly Trap: They are designed to entice investors rather than to increase a company's value or your net worth
? Diversification is a lie: Many “alternative” asset class provide returns that so closely mirror their traditional counterparts that the only noticeable difference is more money for the advisor
? Credit Unions Aren’t for Everyone: While they can offer better loans, many credit unions are invested in the same dubious investments as their banking peers
Munson argues that advisors are getting a failing grade when it comes to servicing their clients. The industry and the vast majority of people inside it are aging and failing to keep up with the times. They keep relying on buy and hold and other tired strategies that don’t work in today’s markets.
Munson learned the Wall Street game the hard way, from his formative experiences as a trader at Bear Stearns and then as a broker with Charles Schwab. After becoming disillusioned with the lack of customer focus at both companies, Munson struck out on his own and started Portfolio, LLC, an investment advisement firm focused on the investor based in Albuquerque, New Mexico.

Lee Munson’s New Book is a Wake Up Call for Investors
 

From the halls of Congress to the legions of angry people part of the Occupy Wall Street movement, there is an overwhelming sense of disappointment and annoyance at America’s financial system. The question now is how to reform and change the system to benefit the 99%, rather than an entrenched, entitled class.

Lee Munson, a Wall Street insider turned entrepreneur and gadfly, takes these questions on in his new book Rigged Money: Beating Wall Street at its Own Game (Wiley, $29.95, December 2011; Hardcover & ebook; 978-1-118-09968-1).

Munson starts with a simple premise: Wall Street needs Main Street. What needs to change, he argues, is our desire to allow Wall Street to sell us products designed to solve problems we don’t have. Wall Street survives only if their clients succeed – the false sense of self-interest and self-preservation will only lead to more MF Global, Bear Stearns and Lehman-style meltdowns.

Rigged Money is Munson’s investment manifesto, and describes the same constant-risk process that Munson applies to his client’s portfolios. The book is a wake-up call for investors and financial advisers everywhere.

“Investors need to make sure that they take advantage of calm markets,” Munson says, “while pulling back when things are more volatile, like this current market environment.”

Rigged Money lays out strong opinions on key issues in the investment and financial advisor community:

  • Advisors are Stuck on the Same Old, Bad Methods: Pie charts lie when it comes to accurately describing the risk of stocks and bonds
  • Dividends are a Venus Fly Trap: They are designed to entice investors rather than to increase a company's value or your net worth
  • Diversification is a lie: Many “alternative” asset class provide returns that so closely mirror their traditional counterparts that the only noticeable difference is more money for the advisor
  • Credit Unions Aren’t for Everyone: While they can offer better loans, many credit unions are invested in the same dubious investments as their banking peers

Munson argues that advisors are getting a failing grade when it comes to servicing their clients. The industry and the vast majority of people inside it are aging and failing to keep up with the times. They keep relying on buy and hold and other tired strategies that don’t work in today’s markets.

Munson learned the Wall Street game the hard way, from his formative experiences as a trader at Bear Stearns and then as a broker with Charles Schwab. After becoming disillusioned with the lack of customer focus at both companies, Munson struck out on his own and started Portfolio, LLC, an investment advisement firm focused on the investor based in Albuquerque, New Mexico.

 

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