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AAA ratings: a 'grim' fairy tale

By Addison Wiggin - posted Tuesday, 7 September 2010


Even if American investors are content to continue this charade, the Chinese are not. An upstart Chinese ratings agency, Dagong Global, has begun to offer a competing perspective. (Check out the rating on lucky nation #13 in the chart below!)

Insert chart

There's one easy takeaway: you still can't trust Wall Street. The same players and the same rules that created this mess - largely for their own benefit - are still a part of the game.

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The other pill is a little harder to swallow. In the current market environment, the individual, independent investor has the best chances of long-term capital appreciation when he invests outside of "The Wall Street Fandango". When it comes to the truly important investments in life, leave the indexes, blue chip stocks, sovereign bonds and super funds to lower Manhattan.

Ratings agencies and their banker clients do not bother with small companies, commodities, smaller funds and other securities that have little potential to make them large amounts of money. What's more, they have no stake whatsoever in the status of your small- to medium-sized business, your family, your education or your local under-the-radar investments.

It's in these arenas, where Wall Street has no dice to roll and no purses to snatch, where your failure or success is determined by little more than willpower, wit and some luck. That's the best a good investor could ask for.

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First published in The Daily Reckoning on August 31, 2010.



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About the Author

Addison Wiggin is the editorial director of The Daily Reckoning, and executive publisher of Agora Financial. His second editions of international best-sellers Financial Reckoning Day Fallout and The New Empire of Debt. His third book, The Demise of the Dollar ... and Why it’s Even Better for Your Investments was updated in 2008, the same year he wrote I.O.U.S.A.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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