Rigged Money

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the general public that investing across different asset classes is the only way to protect wealth, but this is an outdated rule that no longer applies.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.

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

LEE MUNSON worked as a speculative tradervduring 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.

To understand the economy you have to understand one simple, but unspoken, truth: Wall Street needs money from Main Street, not the other way around. Keeping this secret from the public has been an essential part of the development of the American economy for over four hundred years, but now that you know it—and with advice from Wall Street insider-turned-realist Lee Munson—you have the power to protect yourself and your money.

Rigged Money: Beating Wall Street at Its Own Game explains in detail how the financial industry has systematically worked to convince the public that investing across different asset classes is the only way to protect wealth. At one point this was probably sage advice, but today it’s an outdated rule more likely to bring disaster than success. Since asset classes—from small caps and international stocks to gold and bonds—now overlap when it comes to risk and volatility parameters, the diversification effect is gone, and with it, any reason for spreading your money around. It’s this change in the financial landscape, and the rules of the game, that Wall Street doesn’t want you to know about, and that this book discusses.

Revealing the truth about the system while arming you with the simple, smart, and clear advice that you need to go head-to-head with the financial giants, Rigged Money provides advice to investors on what Wall Street is doing behind your back and how you can use the same techniques and knowledge to level the playing field.