Investment Rarities Incorporated
History |  Q & A  |  Endorsements  |  Portfolios  | Flatware | Gold Coins  |  Silver Coins  |  Contact |  Home

Products

Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

..Read More »

The Best of Jim Cook Archive

 

Best of William Histed

April 17, 2012

archive print

The Federal Reserve Bank and the U.S. government (not the exact same things) are not the only ones who can print up at will impressive fancy paper certificates claiming to represent monetary value.
  
Wall Street owns a lot of printing presses and has been busy printing up billions and billions of "new shares" each year the same way Washington increases the money supply.  Wall Street dilutes share values by increasing the share supply and the FED dilutes the value of the paper dollar by increasing their supply.
  
Just as the "Fed" can manipulate the supply of currency, publicly traded U.S. corporations are also able to inflate the number of shares of stock on the market.
  
When I bought my first shares of stock at the age of 15 when my mother drove me to a broker's office a distance away, I used to study the Standard and Poors booklet my broker gave me.
 
Back then, in the late 1960s and early 1970s, some of the largest corporations in the United States  had maybe only 9 million, 13 million or 30 million shares out.
 
Today, it is not unusual to find large U.S. corporations having 500 million, 1 billion or 2 billion shares floating around.
  
I wonder what it is like to own one-billionth of something.
  
I wrote a while back about Citigroup having 6 billion shares out, and sure enough, the company did a "reverse stock split" that meant for every ten shares you once had, you now have one.
  
While, depending on corporate charters and state incorporation laws, corporations usually must get shareholder approval to increase the number of "authorized shares," there are some other widespread corporate practices I am worried about.
  
In the news the other day, it was reported just one officer in a major U.S. company will be paid $30 million this year.  That does not include all of his "stock options,"  "deferred salary and benefits" and other tricks used today to dilute the value of shares held by the real owners.  It can be proven that many top U.S. corporate executives earn in the tens of millions of dollars a year while company shareholders get no dividends and the stock market goes nowhere.
 
The average rank and file worker gets fired for producing no worthwhile results, but top corporate officials are basically treated as kings and queens at the expense of the small shareholders.  Ironically, tens of millions of U.S. citizens are hoping these companies they own stock in will provide them with wonderful retirement benefits in a few short years.
  
It is legendary the incestuous relationship widespread today on Wall Street in which boards of directors that are supposed to represent the interest of share owners instead represent the interests of corporate executives.
  
Why is it that some major U.S. corporations that have lost billions and billions of dollars for shareholders in the past few years, continued to pay tremendously large salaries to inept management?  Some corporate executives even got raises and cheap stock options as a reward for losing money for the real owners---the share owners.
 
Several things greatly concern me about the stock market today:

---Executive salaries are generally far too high, and way out of kilter with the rest of the wage earners in this country.  Remember, corporate executives are employees just as much as janitors, clerks and assembly line workers.  As tens of millions are unemployed or underemployed in this nation, the the corporate management class as a rule has been left unscathed.
---Often, U.S. major corporate boards are little more than lackeys for the corporate executives. Often, they seem themselves in the same ruling class and protect one another.
---The "stock option" scheme is often nothing more than a legal scam to further raid the assets of the existing share owners, most of whom had to pay market price at the time for their shares.
---Another major scandal that is costing rank and file small share owners is the so called "stock grants."  This is where overpaid management and others get shares of stock totally FREE----to them.  This raid on assets is actually done to dilute the value of existing shares.  This is the corporate and business version of the Federal Reserve Bank and its endless printing press.  Corporate America simply prints up more stock certificates and dilutes the value of existing shares the way expanding the "money" supply makes current dollars worth far less.
 
I sold my 200 shares in a major restaurant chain when I saw how the board was awarding itself free shares of stock and the members weren't even holding the shares, but selling them right away and pocketing the money.  This is going on every business day on Wall Street.
 
The government and Wall Street have used the lure of tax deductions and tax deferral to sell much of our work force on stock-based "retirement accounts."   Everyone into the pool....as someone is about to pull the plug.
 
I fear many small investors, including those depending on their "retirement stock accounts" will be bitterly disappointed someday to see some of corporate American and Wall Street are watering down the value of their stock in very much the way the Federal Reserve Bank and Congress are watering down the value of the dollar.
 
If you want further evidence of what I am telling you, ask about "diluted value" of dividends or stock.  Many publicly traded companies acknowledge this....that there is a lot of their stock out there that is not seen directly, but is being given away or sold for a fraction of its value to "insiders."
 
I believe most publicly traded U.S. corporate boards no longer see the share owners as the actual OWNERS of our major companies, but see them merely as "investors" whose shares go up and go down.
 
Many corporate boards, the business media and others see the EXECUTIVES as the owners.  They are not...not in reality.  They are merely employees and many U.S. corporate boards are being remiss in letting the management run away with the company.
 
Why am I writing about my fears that many U.S. corporate stocks are highly watered down?  This is, after all, a hard money site.
 
First, I believe the theft of great wealth is taking place in our country on Wall Street the same way it is being done publicly in Congress.
 
Secondly, the gold and silver crowd is often expected to be on the defensive when the record speaks for itself.
 
Some critics who say metals prices go up and down don't seem to see their stocks are being watered down and what should be corporate profits returned to the real owners---the share owners---are going into the pockets of over-paid corporate executives who are looting some of our household name corporations.
 
What the Federal Reserve Bank and Congress have been doing---robbing the public----is also being done, in my opinion, in the so-called "private sector" on Wall Street.
 
While most "money" today is simply figures in computers, many corporations no longer issue printed stock certificates to most of their shareholders.  When I say both Washington and Wall Street are printing up hoards of paper that dilutes the value of existing paper, it is figurative speech.  But the meaning is the same and it will someday be easily seen by all at Wall Street has been fleecing its small investors the way Congress has been fleecing those still producing.
 
So it you find yourself playing "defense" when it comes to precious metals, let the critics who love totell you about their faith in Wall Street and stock retirement plans learn the hard way how they are being taken to the cleaners.