There is no doubt that the stock market has drastically changed since it was first created. With a completely different structure, investing itself, as well as the rules of investing, have also evolved. But just how much has changed since then and what does this mean for the modern day investor? In this episode, CEO and founder of Boron Capital, Blake Templeton goes over the changes and the new rules of the evolved stock market.
There is no doubt that the stock market has drastically changed since it was first created.
With a completely different structure, investing itself, as well as the rules of investing, have also evolved.
But just how much has changed since then and what does this mean for the modern day investor?
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Key Takeaways:
History of the stock market (1:01)
Fees from the beginning VS the average mutual fund fee today (2:47)
Example of a fee breakdown (4:56)
How “looser” regulations and bulk stocks were created (6:40)
Is there a solution to paying too many fees in the stock market? (7:39)
First rule to becoming an insider (7:55)
What is the public market? (8:09)
Secondary market: Outsiders have to stay on the outside (10:05)
What is the private market? (11:15)
Third rule to becoming an insider (12:02)
How has the Federal Reserve saved the public insiders? (13:36)
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-- Make sure to subscribe so you never miss an episode!
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-- DISCLAIMER: Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses. No communication by Boron Capital, LLC Inc. or any of its affiliates (collectively, “Boron Capital, LLC™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this episode is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
There's no doubt that the world has evolved at warp speed. It's absolutely no different for the stock market. Is it even possible in 2021 to actually build wealth? Let's find out right now.
The Whirlwind from the dark ages of horse and buggy transportation and outhouse plumbing to working electricity and putting a man on the moon in less than a single century. Why does it even matter? Because we don't know where we've come from. We don't know where we're going. Let's talk history the stock market. Did you know that before there was electric trading, daily trading was approximately 1.1 7 billion shares on average in December 2019, daily trading was 6.5 4 billion shares on average, that's literally almost six times the amount of shares. Technological shifts are causing the landscaping of trading to change so quickly since the inception of the stock market, that the rules are rapidly changing along with it at the inception of the stock market, investors and companies are actually in business together, the investors actually own shares of the real company, the actual company that was in the stock market. Since that time in 1792. This system has been mutated, literally mutated to the point that in the ensuing decades, the original agreement of how trading would be done in New York, known as the Buttonwood agreement is unrecognizable. This 84 word agreements spelled out exactly how trading would be done in the Stock Exchange under the following limitations. Number one, the brokers or to deal only with each other, thereby eliminating middlemen like auctioneers, additional money managers and brokers in between number two, they established a point to 5% commission rate. Now let's break that down for a second, I'm talking a fourth of a percent, not 4%, not 1.4%, a fourth of a percent. That's the only commission they could actually make. Now, this is almost laughable for our current system. And that's why everyone is so poor. That's why the middle class is shrinking, the average fee for a mutual fund is over 3% 3.17%, to be exact. Now let's break that down. We went from a fourth of 1% to 3.17%. This is why this is so important. And this is why everyone in the middle class is becoming poor. When you set up your 401k, your IRA, your pension, whatever it is, and you put money in a mutual fund or anything else stocks, bonds, mutual funds, ETFs, gold, anything in the stock market. And when you did that, you subjected yourself to the current fees, the entire system has literally been manipulated to the point that we went from a fourth of a single percent to an average of 3.17%. In fees, not to mention there's over 17 fees that don't have to be reported on your actual statement. Now, look, it's not regulated correctly, it's mutated, it's a bad system. Alright, let's break that down. That To be fair, some investments in the stock market may have as low as a 1% fee. But that's still four times what it was supposed to be. When the things started the foundation of the stock market, you had ownership of a piece of the company, and the fee was a fourth of a percent. Now you don't have any ownership of the company, you have shares of a shell company that doesn't produce revenue did you actually know if you're in the stock market in any way, shape or form, you do not have actual shares of the company, you own nothing, you own literally a share of a shell company that doesn't produce anything directly. Now, on the contrary, fees in the stock market can be as high as six or 7%. I was talking to a money manager just today. And he's like, man, I love working with clients who want annuities, because I can work it right and I can pull out six or 7% on them. That's a fee to him. So on your hundred grand, he's making six or seven grand for doing nothing, but literally putting your money in an annuity. That's a terrible idea. All right, let's look at an average example an average example of a fee of 3.17%. And let's just say you were able to make 8% in the stock market. Now that's really good. That is really good in the stock market, the ebbs and the flows. Most people right now Trust me, I talked to a ton of people and most people do not actually make 3% after their fees. Let's say you made eight, you make 8% and let's go on $100,000 example, you make 8%, that's $8,000, then the fees come out. Now let's just forget about the hidden fees. But the real, they're actually coming out of your money and you can actually see where it came out. So let's just focus for a second on the simple the 3.17. When you pull that 3.17% out of your 8%, that's taking $3,170 out of the $8,000 profit on your hundred thousand dollar example that means that you're being charged 39.6% in fees 39.6% in fees, like almost 40% of your entire return is being eaten up with fees in the stock market. The average investor does not know the extent of how broken the stock market system is. And the few that do don't know what to do about it. As Solomon Investor, we always ask all the questions. My quality question for you is are you invested in the right things? Are you doubling your money every seven to 10 years, you know, most people they want the right thing but they're not in the right vehicle to actually achieve it. It with the expanding nature of the stock market the need for looser regulations became needed to keep pace with demand, it was not efficient to have to perform the same tedious procedure for each individual stock. And so both stocks were born such as index funds and mutual funds, which added more fees to investors. This culminated with the introduction of indirect stock ownership where stockholders essentially forfeit their right to have voting rights and were pushed further away to having a true stake of the business. This occurs when someone buys stocks through funds, and is the typical type of ownership for 401, K's and company accounts. Finally, with the introduction of the digital age and online banking, where an electronic world can create the illusion of unlimited growth potential, that degrees of separation and ownership and true value has grown to extremes, literally leaving the stock market more centrally controlled, and yet, increasingly convoluted. What's the solution? It's time to Become an insider one that has the rules for the 21st century game of the stock market, and then can make informed decisions based on those rules. By the end of this video, I'm going to give you three of my top 12 rules on How to Become an insider. The first rule that you have to know is that you're not participating in the stock market, you're competing with it. When you sell a share. Who are you selling it to? You're not selling it back to the company, you're selling it to another investor Okay, for those who are not a Solomon Investor yet, we talk about the stock market, but we use the correct language and that's the public market. So stock market equals public market and the public market is made up of the primary market and the secondary market in the primary market. The transactions are between the company and the investor. You may have heard the term IPO or initial public offering. The IPO takes place in the primary market, where investors in companies are directly linked together. Once the company IPOs they become part of this secondary market what most known as the stock market. Now this is where it gets interesting. In the secondary market transactions are between investor and investor where one investor is willing to pay more money than another. Now let's pause for a second. When a company says we want to become a publicly traded company. They then create that IPO when it's sold into the secondary market. These are shares of a shell company that are sold, not the actual company itself and the investors in the primary market who initiated the IPO. They're typically not looking to hang around for a long term, but rather enter with the sole intention of making money off of the people in the secondary market. The stock market as time passes, most transactions happen between second and third and fourth and fifth and six hand investors and so on. That's how the stock market is actually designed. You're competing with other investors. When you're buying a stock, it's because someone else one does sell it for a higher price. In competition, there's always one who loses and one who wins. When you understand that in the stock market. You're competing against everyone else who's investing not participating with them, you understand that's why the middle class is getting smaller and smaller, because they're the one losing in the stock market. The secondary market is not anchored to tangible revenues, but rather, it works as the highest bid in an auction. inside knowledge is not something you'd have access to in the public market. Because by virtue of its nature, its competition and using information that could you know give you a competitive edge Competitive Advantage is forbidden for the outsiders. Therefore, in order to maintain semblance of fairness all outsiders have to remain on the outside and speculate in their investments. You know, it's so interesting though investors are not taught they're actually selling to another investor, they all behave instinctively in a competitive manner. One investor sells or shares to another investor in order not to lose and another buys because they think they are reaping the benefits that would have been the previous investors, the inherent minds of the stock market cultivates inside everyone is each man for himself. I mean, everyone would love to have that inside knowledge in the public market, to be able to know something way beforehand and to put your money in or to pull your money out. But unfortunately, you can't do that. And you've got to speculate because you're an outsider in the stock market. Okay. Another term we'll talk about a lot as Solomon Investor is the private market. So we've talked about the public market, ie the stock market, and now we're talking about the new ecosystem, the private market and the private market, investors are not pitted against one another. They're both reaping the same benefits. Additionally, private companies don't have an endless supply of investors, that they can just bankrupt and they find replacement investors the same day. So they have invested interest to perform to the good of all investors. In this way, the right private investment firm makes their money with the investors not on the investors not regardless, if you're in the public market or the private market, you have to be an insider. However, it's illegal to be an insider in the public market. So the question is, how do you become an insider? Look, I got one more tip for you. But if this is engaging for you, and helping you see how to build wealth, like this video, right now, it tells the YouTube algorithm that this is worth sharing. So like this video now, no, seriously, like, hit the like button.
Turn the thumb blue. And let's roll rule number three, that public insiders have to have you the outsider to keep profiting. See, we established that when you sell your shares in the public market, one selling and one's buying. And both can't win. I mean, they think they're both winning. But well, they're probably both actually losing. But that's a whole other matter. They have to have you The Outsiders continuing to buy and sell, buy and sell so that the shell company continues to move with velocity, the emotional rollercoaster, that's the public market. So in the public market, really the only insiders are those that control the system. And when they're selling, who do you think they're selling to? Unfortunately, you the outsider, without you they have known to sell to when they want to offload something that they would rather have cash for intangible money, rather than hold on to intangible stock, the unwanted goods, it's a sad reality. But in the public market, the insiders sell their stock, the unwanted goods to the outsiders, and the outsiders keep selling those back and forth. And sooner or later, somebody gets caught with the old maid. So in the emotional rollercoaster, every time it goes down, and someone hold on to that and loses, you got caught with the old mate, and then you get sold, that it's gonna go back up, and maybe it does, and then you sell, but you still got coffee all made because the inflation has been eating at your money, and then the fees you've been losing 39.6% every single year on those monies. Now in this crisis, currently, the Federal Reserve has saved the insiders from devastating loss by becoming the buyer themselves. Let's be even more clear, all the famous names, you know, billionaires that seem untouchable, many of them would have lost a giant piece of their fortunes, were it not for the engineered system that was put into place to prevent it, you know, at least temporarily, this fetch raid cannot and will not last forever. Therefore the insiders need you the outsiders to keep this game going not to participate with you, but to compete against you. And when the stock market has changed so much since 1972. And now, you have to know the unspoken rules of the game to be successful. These three rules can be broken down as follows. Number one, you're not participating in the stock market you're competing. Number two, everyone in the public market is an outsider. Besides the insiders, number three, public insiders have to have you The Outsiders in order to keep profiting. There's so much more to becoming an insider, I'll give you three of the 12 rules. And actually after the rules, you need to have a game plan, an actual strategy, a war cry, to actually build your future in the private market and the new ecosystem where you don't have all the fees where you're not literally being controlled by the system. I want to give you that and what I want to do right now is I want to give you two ways to get the rest of that information number one Pull up your cell phone. And I want you to text the word Solomon, s o l o m o n Solomon, to the number 31 996. Text Solomon 231 996. Or you can go to Solomon investor.com, Solomon investors.com. I've got so much more information, top secret, cutting edge information on how to build wealth today in the current economy that you got to have. Again, I want to continue this relationship with you and help you build your future sustainable victory in your investments. It also gives you opportunity to get into our offerings and see what type of investments we have, that may be of interest to you for your future. As always, if you like being stimulated videos just like this, I produce them every single week just for you. So subscribe to this channel right now so that you're notified every single time one comes out, and then hit the bell icon. That'll actually tell you exactly when it comes out. And I'll put it as a notification so you can click right into it. Lastly, as always, I'm praying for you and literally praying directly for you, that God would give you wisdom. They would give you clarity and they'd give you favor in your investments in Jesus name. Be blessed, and I'll see you in the next video.