Is the stock market a dead asset class?

It should be no surprise to anyone that I do not consider myself a genius market prognosticator. Many people could have made small fortunes taking the opposite bet against my market predictions in the past - which makes me think: Why make predictions? Why take a bullish or bearish stance?

The real truth of the matter is, the majority of the time, markets are just going sideways. And in fact the stock market is only up or down a single-digit percentage (as measured by the S&P 500) for this entire decade!

Say what you will about the current statists, er politicians, in charge in congress and in the oval office... the way gov't is forcing itself further and further into our everyday lives and stifling business with new regulation upon new regulation and choking its citizens and businesses with inevitably more taxes and higher inflation...the future looks pretty bleak for American business and the stock market to make any more significant advances than it already has off of the March 2009 lows.

As such, it would appear to me that investing directly in the stock market right now would be a suckers' bet. The only strategies that would seem to make any sense are ones that trade for small swings within a range.

This is a major reason why I've adopted my latest approach to trading the markets. My options strategies are designed to be market-neutral. As long as the market doesn't move either up or down a significant percentage from month to month, my positions will achieve maximum profit. If, however, the market makes a significant move in either direction (it inevitably will from time to time), my positions can still profit with proper timely adjustments.

Think of me as an insurance company. I'm taking in premiums from others who are protecting themselves against the risk that the market will have violent swings in either direction. As long as I manage my risk appropriately and take in the proper premiums - in the long-run I should net a nice positive return.

There will still be innovation in America, and the next Google or Intel or Microsoft will most certainly hit the market soon and make fantastic gains for its early investors. But this money will go to the stock pickers - not to the indexers and mutual fund investors. There will always be money to be made for smart hard working stock pickers. As long as there is a market, there is opportunity. It's the buy-and-hold mutual fundies and index investors that will be frustrated by permanently lower rates of return.

Have I given up on America? Emphatically no! However, the reality is we are headed to a permanently slower GDP growth rate and we are at serious risk - long term - of losing our world leadership position as the home of innovation and freedom due to over-regulation and over-taxation.

Until America realizes it IS NOT infallible, this situation will not change. Many of the socialism-inspired ideas being bandied about in Washington have been tried in countries all around the world throughout history. And EVERY TIME it has failed. This is no accident. The mistake I fear America is making is that we think that because we are America - we will not fail. People believe we are the greatest country in the world with the greatest freedoms afforded to its citizens - therefore it is impossible for us to fail. Well, people seem to forget this isn't something we are entitled to. And it isn't something we should take for granted. It is hard work to maintain what made America great. We are slowing chipping away from its greatness.

The people of ancient Rome thought they had the greatest, most enlightened civilization in history. Then they took that for granted and destroyed themselves.

History repeats itself.