So what's the allure of commodity futures?

Hello all:

It seems to me that in the past 2-3 months I am starting to hear more and more people out there become increasingly interested in trading commodities futures. The software company where I work offers equities but more people keep wanting NYMEX and COMEX data and I think it would be helpful to get inside the heads of some commodities traders to know what y'all are thinking. These posts are excellent to read but I would also appreciate some general insight as to what makes commodities futures trading so different. I look forwrad to the responses!

 

It sounds like you are saying there's other stuff to trade besides the emini.

 

Very favorable tax treatment for traders. 60% of profits are booked at the short term rate and 40% at the long term rate.

Stocks...100% taxed at short term rate.

 

Mr. HillCast, let me ask you. Why does anyone need a stock certificate?

Why does anyone need stock?

In the markets we provide liquidity too. We feed the world, and reap the karma from it.

Why does anybody need a share of stock?

Without us, crops are not planted. People are not fed. The only reason I can see for companies to offer equities is to fleece the public from there hard earned cash.

So again I ask:

Why does anybody need stock?

 

Imagine you are on the Arizona desert in the late 1800’s.
Along the trail, you see the waste left by vultures. Scraps of skin, guts and bone. Still of use to worms and spiders but clearly beneath your elevated notice.

Similarly. If you have some great scheme, you should have no need to sell securities. If your idea is so, huge why not pay your employee’s and suppliers in I.O.U.’s, form partnerships and alliances with your allies and competitors. Get a few Senators on board.

If your thing is so great, why don’t you get the U.S. Treasury to issue securities like they did for Chrysler?

The Government can pass legislation to strength your position and reduce the need for capital. You can make deals with the Government like the Cartels. You can receive advance funds from foreign governments to expand into their areas.

It is all in the pecking order. Private Investors like the Rothschild’s or Buffetts often pick up the whole capitalization in one sweep. Why aren’t Banks lining up to get a piece of the action?

No its only after its been rejected by Congress, abandoned by J.P. Morgan and the big investment banking houses, passed over by well heeled private investors. Cast-off by lenders. Only as your thing is passed from the well capitalized, well informed down through the less informed. Down the chain from intelligence and great wealth to stupidity and declining fortunes. Only when they have passed down this trail. Only after the Vultures! have scraped off all the meats and juices, only when the sun-bleached bones have turned blue-green and been trampled under foot. Then and only then, is what’s left sold to the public. Sold to the public at the highest possible price.



People are not born one day, wake up and want to own shares of stock. No one needs a share of stock. They buy it because employees of companies with interests clearly in conflict with there own advice them to. They are advised by reports issued from these conflicting interests. At prices legally manipulated, by these same interests.

For example, families of reporters and politicians may own stock. Stock Research companies issue reports to buy securities when their parent company may be selling or making a market in the security. A Broker gets an order to sell a big block of stock from a large client. Who do they want to sell it to?

A large group of small clients. They get commissions both ways. Even better if the clients have to sell off some shares to get the new ones. Mutual funds run up the price on a few hundred shares on the close of a quarter, so that they can declare illusionary profits on the thousands of overvalued dogs they are holding in their portfolios. Management Companies are in bed with the brokers that earn commissions, as fund managers sell the stocks back and forth between themselves. Mutual funds are created to skim wealth for the benefit of management companies at the expense of shareholders. Mutual funds take thousands of dollars a day out of shareholders savings producing nothing in return.

Stock Indexes are managed to go up even though they go down. The public believes indexes are unmanaged, but they constantly replace the laggards with winners. If that is not managing, I do not know what is.

Similar to Mutual funds, Shareholders have no say in management. Corporate Officers at will, at prices decided by themselves for there own purposes, trade real assets back and forth beneath the “public shells,” of ownership. Officers deplete shareholders wealth inversely to increasing their own.

When you have some great scheme, you can have legislation enacted to reinforce whatever it is you are about to do. Publicly owned airways are used by private business to sell shares to the public. Shows like “60 minuets,” (see: The Insider) and “Wall Street Week,” have been bought, as well as their networks.

You cannot eat stock. You cannot drink stock. Unless you have many cotton fiber certificates, stock will not keep you warm. It is very difficult to even see stock, as the industry is afraid to deliver it to you because you may find its true value in a Bear Market when you run out of toilet paper.

So in brief. Your big idea will move from the well informed to the ill informed. Whatever is left will fall to the bottom of the barrel and be sold to the public at the highest possible price. Paper Shufflers, none of who will add any value whatsoever, will latch on and suck enough blood out of your great thing to make it barely competitive.

So, nobody needs a share of stock. People with bad ideas need to sell stock to the public because no one else wants it. The Government encourages an army of parasites to facilitate this wealth drain, because they are unable to find a productive use for them and they still need to feed their families. Public stock is just the picked over scraps left by finance vultures. Vulture leavings, waste..