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The Truth: Why Sanders and Warren REALLY Hate Capitalism

The Wall Street vs. Main Street divide in this country continues to grow.

What started as Occupy Wall Street movement in the wake of the 2008 financial crisis has morphed into an all-out assault on capitalism.

Now, Democratic Socialism is gaining a foothold in the greatest free market society in the history of the world.

And its ringleaders — Bernie Sanders and Elizabeth Warren — unfortunately had some smooth responses over the last two nights that I imagine sounded great to many American voters.

So what happened in our country that led us to becoming so economically divided?

Today, I want to sum up the divide between Wall Street and Main Street in a single sentence. And as you’ll see, it’s not too late for you to join the more lucrative side of this debate…

An Unfortunate Truth About Corporations

Much of the division between Main Street and Wall Street can be traced back to this single truth:

The purpose of a corporation is to create shareholder value.

This is a fact.

Ask any CEO what their job is and they’ll tell you the same thing.

  • Apple CEO Tim Cook’s job isn’t to sell iPhones.
  • Disney CEO Bob Iger’s job isn’t to create the next Mickey Mouse.
  • And Facebook CEO Mark Zuckerberg’s job isn’t to keep you glued to your computer screen.

They all share the same job… That’s to create shareholder value.

In short, if the company is publicly traded, it means boosting its stock price for the benefit of investors who hold the stock.

However, there’s an unfortunate consequence of this. And as I want to explain today, it’s largely the reason for the growing social divide in today’s America.

Shareholders vs. Stakeholders

Here’s how businesses work…

An entrepreneur with an idea decides to sell his good or service in exchange for payment. If the venture is profitable, competition is lured into the market. This forces the entrepreneur to either innovate or cut costs in order to stay afloat. But innovating isn’t as easy as it seems, which is where Main Street and Wall Street begin to differ…

You see, in order to appease shareholders, the entrepreneur — or CEOs of today’s publicly traded companies — turn to cutting costs.

This is much to the chagrin of Main Street.

That’s because Main Street is comprised of the stakeholders of a business.

Stakeholder (noun): a person with an interest or concern in something, especially a business.

These aren’t the people who own shares of a company. These are the people who rely on the company to put food on their table!

I’m talking about the workers of the company, the suppliers of the company, and the people that live in the surrounding community that rely on the company to boost the local economy.

These are the people who are really impacted by business decisions. But unfortunately they’re not the primary concern for business leaders — shareholders are.

This is widely responsible for the divide between Wall Street and Main Street. Wall Street cares about shareholders, while Main Street cares about stakeholders.

This unfortunate truth is evident in the stock market every day. Recent examples include:

  • Ford’s stock price rallying yesterday after the company announced job cuts and plant closures.
  • Amazon’s stock price falling when the company announced raising the minimum wage for U.S. workers.
  • And tech stocks like Facebook and Google rallying on and off when antitrust fears subside — although these companies have clearly taken liberties with our personal data!

In each of these scenarios there was only one winner.

And it wasn’t the stakeholders…

That’s why we here at The Daily Edge want to encourage you to be a part of the shareholder group. It’s time for you to stake your claim to a share of corporate profits so that no matter what decisions are made my C-suite execs, you’ll wind up a winner either way.

You can accomplish this by simply buying shares of the market’s strongest stocks.

Right now, we here at The Daily Edge recommend buying shares of junior mining stocks to take advantage of rising gold prices, as well as large-cap bank stocks that still trade at reasonable valuations despite boasting healthy balance sheets.

Of course, these picks are being updated constantly as events occur and business decisions are made. So stick with The Daily Edge as we continue to bring the market’s latest updates to you on a daily basis.

Here’s to a stable retirement,

Zach Scheidt

Patrick Stout
Managing Editor, The Daily Edge
EdgeFeedback@StPaulResearch.com

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Patrick Stout

Patrick Stout is an American patriot and financial market analyst. With decades of real-world investing experience under his belt, there is no market that Patrick hasn’t seen. In his spare time, Patrick enjoys competing in chess tournaments and playing pickup basketball games throughout the Baltimore region. Look for Patrick’s finest research in The Daily Edge...

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