But as an Engineer (owning a calculator) I couldn't understand how these companies made any dough. We would do these "Equity Placement" deals, lining up small dot-com startups with angel investors. At the celebratory champagne party, we would have the founders of the company sign off on our seven-figure bill - after a few glasses of champagne, of course. As one of the partners in the firm told me, "Once they are drunk on the capital funding and the booze, get them to sign off on the bill, before reality sets in".
But worse than that, it is merely a way of moving money around - taking small amounts of money from a lot of people - through gambling - and giving it to a few people at the top. It is not creating wealth, but merely rearranging it.
And sadly, it seems our economy is devolving into a Casino Economy - literally or figuratively. As I noted before, it seems that most Americans live within 30 minutes of one sort of Casino or another - whether it is a tribal reservation, a gambling boat, or whatever. Even the government has its hand in the mess, with lotteries of one sort or another.
But worse than that, it seems the regular economy is devolving into one giant casino. The name of the game today is to rip-off the consumer, not sell him goods of increased value. The idea is to get the consumer addicted, to food, to drugs, to liquor, cable TV, the smart phone, whatever, so that they will feel that they need this stuff like it was oxygen and they will suffocate without it.
The financial channels and news websites talk about "the economy" in terms of what new IPO you should "invest" in - by placing your bet and hoping that you will "win". The idea of investing in a company that takes raw material and labor and combines them to produce products that are worth more than their constituent parts is, of course, not even discussed. Dividends? Who cares about dividends?
Sadly, the small investor, who watches five hours of television a night, falls for this sort of nonsense, lock, stock, and barrel. They watch the shouting guy and think, "Gee, that must be how you get ahead in the world, by picking the right stock, and watching it go up by 1000%! All I need to do is buy the right stocks! And certainly, I am the only one who is watching the shouting guy, and thus his stock tips won't be picked up by several million other people!"
No, really. People really think this way. They think that a "stock tip" announced on television and known to millions of viewers, is some sort of "inside track" on secret knowledge on how to "win" at investing.
It is akin to these folks who sell "systems" to winning at the slots, or blackjack, or whatever. It is, in short, gambling.
The small investor - the poor investor - the dumb investor (they are one and the same) does stupid things with what little money they have. They buy gold at $1500 an ounce, because Glenn Beck told them to, and everyone knows that Glenn Beck is never wrong about anything. They buy whatever stock is mentioned in the press, even though the huge gains are all behind us now. The buy what is trendy, what is topical, what is a "sure thing" to go up, because"everyone is talking about it".
They buy a mini-mansion on a funny mortgage, because the TeeVee said "everyone is making money in Real Estate!"
They are just plain gambling.
And when they lose it all, they get pissed off. Someone took their money. But they won't admit that no one actually "took" the money, but rather they willingly gave it away on ill-conceived schemes and strategies. They put money in a slot machines - figuratively or literally - and lost it all.
And this is not by accident. The people at the top of our economic pyramid make a lot of money from the economic weaknesses of the people on the very bottom (or near the bottom). These are the folks who rake in the dough at check-cashing stores or payday loans. These are the people doing IPOs to sell off a fraction of a company for hundreds of millions of dollars to the "little people" who do stupid things like throw $500 at a new IPO, figuring "what have I got to lose?" (Answer: $500).
The secret to getting ahead, once again, is no real secret. The answer is to stop gambling and stop calling your gambling investing. The idea that you can leverage yourself to wealth by placing a bet on a a stock, a commodity, or a roulette wheel, and then hitting it big, is very flawed. Not only are the odds long, the game is fixed.