Adapt your strategies in an increasingly rigged market

You ever heard the term, “The markets will climb a wall of worry?” Well, that’s exactly what we’re seeing here as the markets and so many stocks slip their toes into the cracks and keep on climbing the wall of worry.

Last week, I wrote a column called, “How badly is Wall Street cheating you?” I got hundreds of responses from readers. The responses fell into four main categories:

1) I know the system is rigged against me, but what else can I do with my capital? Vegas is no better or worse than Wall Street. (55%)

2) I have been cleaned out by an evil brokerage/bank and I am still very angry about it. (20%)

3 ) I learned that the system was rigged against me when dot com bubble popped and I’ve never bought another stock since. (15%)

4) Cody, you are an idiot for ever having written bullishly about any stock that ever went down. Idiot. (10%)

It seems that most of us have accepted that Wall Street is rigged against us, but we accept it as some sort of a tax. Interestingly, NOBODY wrote me saying that they thought Wall Street and the system were fair. That’s 0% who think that Wall Street isn’t trying to steal your money.

I take away a couple points in this information.

Over the longer-term, the more opportunities that Wall Street has to front-run your trades and to extract fees out of your capital, the harder it gets to outperform. And the rigging of the trading game has gotten worse in the last few years, with high-frequency front-running (commonly called high-frequency trading) and a lack of prosecution for financial crime and the increasing rigging of the trading game is making it very tough to move your money around and to trade aggressively.

It’s probably getting increasingly important to try to find a few huge homeruns like Apple, Google, F5, Amazon, and Priceline, and buy them personally and then ride them successfully over years. Short-term trading becomes increasingly less important to long-term outperformance.

And the second point? The big banks like JPM, Goldman, and even Bank of America have all rallied 10% or more since I posted that column and started receiving so much angst about the big banks. Should have know a column about their existence would mark at least a short-term bottom in the financials, huh?

Anyway, the real point is that it’s harder now than ever to be a successful investor and trader — and it’s never been easy!  Think independent and learn everything you can about how to take control of your money. And most importantly, stay in the game.

The key is that it takes years of patience, diligence and steady successes to keep from losing your shirt to a game that is indeed rigged against all of us.