Dear Mr. Berko:

Dear C.D.:

There was once a day, in another lifetime not long ago, when investors could confidently select a winning portfolio of stocks. We did it by evaluating the past successes of management, by assessing the quality and ratios of a company’s balance sheet and by examining the quality and ratios of its income statement.Then, depending on a company’s revenue growth, we could project, with a modest degree of accuracy, earnings and dividend growth. We would compare its products to those of its competitors, talk to a few of the company’s consumers and interview a few suppliers. It was also important to know the number of shares owned by management and the board of directors.If the data was satisfactory, then all we needed was a good dose of logic, common sense, patience and a long-term horizon of six to 12 years.But yesterday’s market — the same market that allowed many of us to accumulate portfolios of strong, conservative, income-producing stocks — has morphed into a trading market in which prices are determined by awesome volatility and momentum charts. High-frequency trading patterns have become more acceptable than balance sheets. Complicated algorithms replace income statements, and insider trading and fronting determine the stock’s price.As a result, the stock market has become a carnal carnival featuring buskers, an organ grinder with a dancing monkey and a cockatoo, whirling gargoyles and somersaulting midgets.Back in the day, Merrill Lynch was marketing a monthly investment plan to the nation’s investors. We were encouraged to invest as little as $10 a month, which would purchase single or fractional shares of any one of hundreds of New York Stock Exchange (NYSE) issues. A broker would help you pick a stock, emphasizing growth or income, and discuss the wisdom of dollar-cost averaging. So if you had the discipline to invest a slice of your paycheck each month, you were certain to have a little nest egg to butter those retirement years.Way back then, folks like us comprised 85 percent of the volume on the NYSE. Today, 85 percent of the trades are conducted by hedge funds, money center banks, billionaires in Macau, private money managers and investment banksters such as Goldman Sachs, Jeffries, Perella Weinberg, Needham and Brown Bros.Today’s market is a playground for the rich and the uber-rich, for riverboat gamblers, many-tentacled traders and Wall Street’s greed squad. It’s a “gimme, get me and do it now” venue in which long-term investing skills are anathema to the brokerage industry. Today’s Merrill broker, for instance, must maximize his commissions because his branch office needs to maximize its commissions because Bank of America Corp., which owns Merrill, must maximize its revenues. And every year Bank of America needs to increase its revenues and profits, because shareholders demand higher numbers.So investors who buy good stocks and hold them as they appreciate or increase their dividends are personae non gratae. Most brokers would starve and brokerages would close their doors if their clients bought a few hundred shares a few times a year and reinvested the dividends. Or they’d be canned.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775, or email him at mjberko@yahoo.com. © 2011 Creators.com