An Emergency Situation
April 24, 2012 in Finance, World
I’ve written several times on this website about why investing in paper such as stocks, bonds, and mutual funds is a bad idea if you wish to keep your money. I have formed this opinion because my research and my experience show these investments offer small rewards and hidden risks.
Yes, I realize that Certified Financial Planners and other trained and licensed advisors – those who make money only when someone invests – claim they can show you how to reduce risks and maximize rewards. However, their perspective is so narrow they often ignore the big picture.
For example, they don’t look at risks that go with releasing the control of your assets to someone else. Moreover, if they are advising you on a retirement account, they don’t mention that placing your assets in a retirement account gives the IRS legal control over your assets.
I’ve written previously about those risks.
However, I haven’t written about the hazards associated with an emergency situation.
In fact, if yesterday’s situation in Russia is any indication, it seems that no one really understands those risks.
Around midday yesterday, I started seeing mentions of a story on the ZeroHedge website regarding the Russian Trading System (RTS). It said the Russian Stock Market will not reopen.
I hadn’t heard of the RTS so I did a little research. I discovered the RTS is the equivalent of the NASDAQ system in the United States. I also learned that the majority of Russian equities trading is conducted there.
I assumed this would be a huge story so I waited for other news outlets to report it.
They didn’t.
I nosed around the internet and – other than a few bloggers who were writing about the ZeroHedge story – I found nothing.
One blogger speculated that the closing was tied to this story about European companies losing more than one hundred billion pounds in value yesterday. (See the comment section of this article for what the referenced blogger really meant.)
However, even that story from The Telegraph didn’t mention the closing of the RTS.
I went to sleep thinking that something would be in the news this morning.
I found nothing to explain the situation exception two cryptic stories.
One from Reuters and another from Bloomberg: each story was the shortest financial story I had even seen written on their sites. Either they knew nothing or they are hiding everything.
There was also an explanation from RTS apologizing for the situation and saying steps were being taken so it wouldn’t happen again.
The implication was that this was some kind of computer glitch, perhaps a hardware or a software malfunction. However, they didn’t explain what caused the hiccup.
The absence of news about this situation speaks volumes.
If I had money in the market, anywhere in the world, I would pull it out immediately. The current situation is so tenuous that, based on yesterday’s events, it can disrupt a resilient computer network, close a major stock exchange, and tie investors’ hands while their assets disappear.
In addition, it can make the world’s media outlets, the ones that pride themselves on astute financial reporting, completely deaf and dumb.
What is going on here?
If today’s lack of reports is any indication, I doubt mainstream media will give us an explanation about yesterday’s events. Therefore, I’ll explain what I think happened in tomorrow’s article.
