Do you sell short?

In a declining economy, what strategy do you use to build your stock portfolio? After all, if you look at the stock market purely as a form of gambling, then it doesn't matter what happens to the stock price or its effect on stockholders as long as you're the one making a profit during a buy or sell.

Or does it?

I've played with that idea my whole adult life (a mere 33 years to you oldtimers). Should I just be concerned about profit for me since I see so many others trash the stock or value of companies for their personal gain?

The Bernie Madoffs and Kenneth Lays of the world give me pause.

Am I motivated by profit?

A childhood friend recently invited me to join an MLM group to which he belonged and claimed he was enjoying a healthy profit. Through the years, many friends of mine have invited me to join similar money-making ventures, including the classic Amway pitch and other networking methods involving sharing profit among a hierarchy of participants. After each presentation, I have respectfully declined my friends' invitation, despite the good life my friends are living based on their MLM success.

Why pass up a sure thing? Why, indeed. Well, what is a 'sure thing'?

In my business life, I have experienced the ups and downs of economic cycles, enjoying fat bonuses one year while getting no annual raise the next, based on the company's performance and profit projection. Not once have I declined a bonus check or pay increase so why do I look at selling short or joining an MLM as something different?

Good question. And after watching another economic decline in my lifetime -- one that will likely surpass the ones I saw in the 1970s, 1980s and 1990s -- I have realized what my answer is:

Fear.

That's right. Fear. Fear of the unknown. Fear that my actions will cause undue negative consequences for people I may or may not know (selling short). Or taking advantage of other people's fear of not being accepted (MLM/network marketing).

Most of us belong to one group or another. After all, we're social animals. We're all joiners --some of us joiners are leaders and many of us are followers. We often act like the ubiquitous rock doves or common pigeons (Columba livia) you see lined up on building ledges and power lines -- establishing a pecking order.

As this global economic decline keeps shaking more and more people out of offices and factories, tens of millions of people will be looking for some way to make a living. They'll want answers to why they lost their jobs, pecking the ground and each other, hoping someone steps forward with the answers they want to hear.

I'm not a betting man but if I had to make a bet, I would place my wager on the leader(s) who convince people to join up in an MLM or network marketing company that promises to provide economic stability while securing profits and good living for the members and family of the MLM, even selling other companies short in the stock market to build their MLM's profit. In other words, now is the time to look for people who are promising a glorious future in an "us versus them" scenario. It's those kind of folks who will deliver on their promises, in both the near-term and quite possibly into the long-term, too, especially if they use emotionally-charged pitches involving religion to get you to join.

History has shown us these kind of schemes have been proposed over and over during economic slumps and there will always be those who join, no matter what. If Bernie Madoff and Kenneth Lay can dupe people during the best of times, look out for who's coming out of the woodwork in the worst of times!

I won't sell stocks short and thus, I won't sell myself short, either. I don't lecture people, if I can help it, but this time I'm warning you to avoid joining a group whose leaders paint a rosy picture. Just because a guy or gal is nice-looking and has a slick proposal does not mean they have your best interests in mind. Don't sell yourself short.