Destroy Wall Street

This post is about the logical extension of BUYING locally. It's all about INVESTING locally.

There are a lot of topics related to small business and microbusiness that bring out great passion in me. This post is going to be about one of those things that excites me and scares me....makes me crazy and happy...makes me DREAM of a better future.

I'm ready to destroy the Wall Street model.

Why does Wall Street exist? Anybody in Finance will tell you that Wall Street exists for one simple reason: to allocate capital. The Wall Street model of capital allocation may work just fine for pension funds and institutional investors. But I don't think it works well at all for most investors. Furthermore, it's easy to imagine a system of capital allocation that would work better for small business and microbusiness people.

For years, Americans have been working hard. At the end of the week, we shovel our extra nickels and quarters into our IRA or our 401(k). That fund is administered by some lackey on Wall Street. They rate the investments (based on who they are underwriting, not based on any legitimate merit), they run the funds, they take your extra nickels and quarters and they PAY THEMSELVES FIRST.

Don't kid yourself. They pay themselves first. They ALWAYS pay themselves first.

If there is any money left over, you might squeak out some kind of return from Wall Street...at least, you have a chance if we're in a long period of prosperity. There are also a couple of long periods in the last 40 years without much prosperity. But if things are going well and if your fund managers are making enough to pay themselves, you might have enough money for a comfortable retirement.

To me, this model is for shit. And I'm hopeful that RIGHT NOW the stars are aligning for the first time in 150 years in a way that might completely revolutionize finance as we know it.

Look...we've got computers. We've got internet access. Do we REALLY need fat cats on Wall Street to allocate capital for us? Are they really actually good at it? Or is now the right time to take back some control?

Is now the time that we ALL use self-directed IRA tools and learn how to INVEST LOCALLY?

Couldn't that be the next, most logical extension of the movement to BUY LOCALLY?

Everybody THINKS they have a self-directed IRA. If you can buy any stock or mutual fund you want to buy, you would probably tell me that your IRA is "self-directed." Will your IRA allow you to buy, hold, and manage real estate as an investment? Will your IRA allow you to make a private placement in an LLC? There are some TRULY self-directed IRAs out there. Here are a couple:
Equity Trust
Guidant

Bottom line...why would you want to work your whole life and shovel your money off to Morgan Stanley or Goldman Sachs? You're playing their game. They pick the winners and losers, really, and you just hope they are right...or crooked enough to run a Ponzi scheme long enough for you to cash out.

With a truly SELF directed IRA, YOU can make a private placement in a local business...could be a hot dog cart vendor or a person wanting to start a hair salon or a dog grooming business or a shoe store or any one of a million other potential locally owned and operated businesses. Why invest on Wall Street when YOUR investment could be creating businesses and jobs LOCALLY?

The communities that REALLY understand this concept and get out ahead of it are going to be the communities that succeed over the next decade. Economic development doesn't need the inefficiencies imposed by the Wall Street model of capital allocation.

Get out in YOUR community. You already know the benefits of BUYING locally. Now get to know INVESTING locally and see the resulting benefits grow exponentially. Create an investment club. Run a monthly "pitch" meeting. Get some local placements made. We're working on it here in Lawrence, Kansas.

Can you Destroy Wall Street from where you live?