The latest way to get taken

Now, large investment firms don't even have to be smart. They can just make money by being first.

Thanks to an article in The New York Times, we now know that one of the ways Goldman Sachs has made so much money recently was not by being smart, or investing in companies that are leading our country out of the recession, but just by having fast computers.

"It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices."

"Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense."

It's day trading taken to the extreme.

Thankfully, there are companies that take longer-range outlooks on investments. I just talked w/ Julie Gorte this morning. She's the Senior VP of Sustainable Investing at Pax World mutual funds. She told me that Pax looks for sustainable companies: ones that will provide long-term value for their investors by meeting certain environmental, social, and governance criteria.

And here in Portland, Oregon, we have Portfolio 21. They focus on investing in companies that meet stringent environmental criteria. Chairman Carsten Henningsen says, "we see environmental issues as being the biggest risk and the biggest opportunity."

Where's your retirment money?

Who are you supporting?

A cruise and a necklace

When the market crashed last year, I lost $58,000. But that money didn't just vanish- my loss was someone else's gain. Someone like Martin Sullivan, former CEO of the insurance giant AIG. In 2008, the year that he drove the company into the ground, Forbes reported that he made $10.93 million (1).

And I wonder, sometimes- what did he do with that money?

For $58,000, he could take his wife on a lovely 36-day “Top of the World Adventure” that goes from New York to Greenland, then to Iceland (to see the country he helped destroy, financially), then on to happier places like Norway, England, and Denmark.

But wait! That wouldn't use up all of the money I lost!

He’d still have enough leftover to buy a little diamond necklace for his wife. (He's so sweet to her!) I’d suggest the lovely Tiffany Lace Necklace. Only $23,175.

What did your losses buy for someone?

(1) http://www.forbes.com/lists/2008/12/lead_bestbosses08_Martin-J-Sullivan_I8BE.html

No, really...where did it go?

Over sixty million Americans have retirement money invested in the stock market. In late 2008, many people saw their nest eggs evaporate to half of what they were previously. At the same time, executives on Wall Street walked away with hundreds of millions of dollars of this money.

That money that was invested in the stock market didn't just evaporate.

Stanley O'Neal, former CEO of Merrill Lynch, received $172 million from 2003 to 2007 (1). O'Neal lead his company to failure: Lynch was bought out by Bank of America in Sept '08.

Richard Fuld, former CEO of Lehman Brothers, made nearly $185 million in the five years before 2008. In Sept '08, Lehman Brothers went bankrupt. (2)

These are just a few of the examples. Where did your retirement money go? Which CEO did it bankroll? And what did it buy for them?

Let us know what your retirement money bought for someone else- a yacht? A second home? A private jet?

Check back here for more info.

(1) Bloomberg, Sept 26, 2008, Wall Street Executives Made $3 Billion Before Crisis, By Tom Randall and Jamie McGee

(2) http://www.wsws.org/articles/2008/nov2008/ceos-n28.shtml, Nov 28, 2008, CEOs “cashed out” prior to economic crisis, By Tom Eley