The COVID-19 pandemic will have brought to light a truth that many already knew. This truth is that the stock market is no longer the free market that some people once dreamed of. This market is manipulated by different actors, the Fed being the first one.
It is no coincidence that the following adage is often repeated on Wall Street:
"Don't fight the Fed"
The stock market depends largely on the monetary policy that the Fed decides to follow. When the Fed decides to adopt an ultra-accommodating monetary policy, as it did in March 2020, you should take note and adapt your strategy
Indeed, if the Fed lowers rates to zero and decides to print fiat money out of thin air to conduct a massive asset purchase program, you can imagine that the stock market will be boosted in the following months. That's what's been happening since April 2020.
The Fed's monetary policy has pushed the stock market to record levels
The S&P 500 and Dow Jones are now at record highs:
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Such a monetary policy on the part of the Fed is not without consequences. For several months now, we have been witnessing a surge in inflation in America. This inflation is above 5%, and the situation is set to last, although the Fed has long refused to admit the obvious.
From now on, everyone on Wall Street has only one word on their lips: when will the Fed do the tapering?
Tapering is the slowing of the massive asset purchase program that the Fed has been conducting for months. If this tapering is getting closer, the Fed explained at the end of September 2021 that it was not yet the right time, thus responding favorably to the message sent by the financial markets.
The financial markets have taken a liking to these massive injections of liquidity. It is difficult for the Fed to withdraw the infusion of fiat money without causing a crash in the stock market.
Some investors do much better than average in the stock market
Some investors are still doing better than others. If they had to flip a coin to see if they would make a profit on Wall Street, these investors would almost always see the coin fall on the right side.
Recently, Bloomberg Businessweek had a front-page story on the activities of one of these insider investors in the financial markets. Jimmy Filler is a nearly 80-year-old man who made his fortune buying and selling scrap metal in Birmingham, Alabama.
According to TipRanks, a company that rates executives on their ability to make timely trades, Jimmy Filler is “the most successful insider in America
Indeed, he is known for his incredible success in buying stock in companies he advises or invests in directly. Of the 496 transactions he has made since 2014 in ServisFirst Bancshares (Alabama), where he serves on the board of directors, and Century Bancorp (Massachusetts), in which he is the largest shareholder, 75 percent have shown a profit three months later.
Of course, this kind of performance is the stuff of dreams for the world's best stock traders.
These investors have access to non-public information which gives them an unfair advantage
If Bloomberg Businessweek takes Jimmy Filler's case for its article, he's far from the only one having better-than-average luck in the U.S. stock market. According to an analysis by TipRanks, stock purchases by U.S. corporate executives outpaced the S&P 500 by an average of five percentage points between 2015 and 2020.
This is where one of the major limitations of the current system becomes apparent. Corporate executives like Jimmy Filler have access to non-public information that gives them a significant advantage over the general public.
In theory, however, U.S. law governing insider trading is clear. Under the Securities Exchange Act of 1934, corporate executives who abuse their access to such non-public information, either by using it themselves or by passing it on to someone else, can be charged with fraud and sent to jail.
The problem remains that identifying and prosecuting violations is exceedingly difficult, and on Wall Street, the fact that insiders trade on confidential information “has long been an open secret”, according to Bloomberg Businessweek.
While insiders like Jimmy Filler will always have a better general idea of how their company is doing than others, a growing number of experts believe that many insiders make good trades “on something more than luck or judgment”, the magazine adds.
Studies show that insider trading is rampant in the financial markets and that no one - not regulators, not the U.S. justice system, not even the companies themselves - is doing anything to stop it. This is despite calls for reform from legislators like Democratic Senator Elizabeth Warren and Republican Congresswoman Elise Stefanik.
The general public no longer wants this biased market and sees in Bitcoin a fair world full of opportunities
This has led to a growing sense that the market is biased in favor of an elite. A market that does not allow the average person to benefit from the same opportunities as a certain minority of investors who win almost every time.
From then on, these disappointed investors had to turn to a more egalitarian world where there is no such thing as a hacking strategy. This fair world is the world of Bitcoin. Bitcoin belongs to all its users, and no one is more important than another in this world.
Furthermore, no one has more information than another in the Bitcoin world.
Since Bitcoin treats all its users equally, it seems logical that more and more investors are opting to buy Bitcoin instead of investing on Wall Street. A way to participate in the emergence of a new world while having a real opportunity to make the fruits of one's labor grow.
Everything that the current system does not allow anymore for the majority of the inhabitants of the Earth, whether they are in America or elsewhere. This awareness will continue to grow in the years to come, which will greatly benefit Bitcoin, which can give you incredible guarantees.
The most important of these is that 1 BTC today will always equal 1 BTC in 21 million units in the future. This allows you to move forward with confidence in a world where everything is moving so fast and human arbitrariness is causing so much damage.
Bitcoin restores the balance in favor of the many.
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