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Wednesday, April 30, 2014

Our Investment Hot Tip: Prisons

We at A&G as asked often about investing

What is a good stock or set of stocks to but to create a diversified portfolio?

What commodities do we like?   Any metals attract us?    Is it a smarter or safer investment to put money into foreign markets or keep domestically?  Etc..

And that's not really something we like to answer especially here because A&G was not set up for that purpose..

But today we will make a rare exception because we are desperate to figuratively cleanse the palate from the utter disgusting tripe we and most sensible people were forced to swallow the last few days vis a vis the cowardly NBA being the first sports entity to break through the thought-crime barrier and celebrate its role of Big Brother.
So what do we recommend investing in?

Something that is not a fad but rather a continual growth industry..

A business that knows how to maximize profits and has a never ending stream of domestic labor at its disposal and legally is allowed to undercut private businesses making and creating the same products and services..
Prisons.   Yep.. we're 100% serious.  Not tongue-in-cheek or satiric.

If what we write offends as not the type of investment strategy one can not in good conscience pursue, good for you..  But you certainly are the minority..  

And to be clear, we sincerely do not benefit in any way, shape or form whether you follow this advice or ignore completely.   We've nothing to sell ever at A&G..

We exist solely as a small beacon of contrarian "light" in a thick dense sky of conformity and lockstep thought..
So let's start with a basic concept you all better understand before we can continue explaining the economics of prison..   It is legal slavery; the one type of human bondage and trafficking the 13th Amendment to the Constitution did not outlaw..

"Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

This is very important to remember as we go on and as a means to judge whether this upsets your conscience and to the point of if/if not you choose to seek to financially profit off legalized slavery.
There are 2.3 million prisoners currently held in the US which represents 25% of all the prisoners detained around the world..

In spite of all you hear about prisoners having cable TV, air-conditioning and every right under the sun, please understand most if not all of this 'good life' ranting is bullshit..

And trust us, we are not bleeding-heart liberals writing this...

Prison is hell..  Which if you're a true investor, you're shrugging at that statement..

Let's put aside the fact that because of our prison system, the US is the only nation in the world where more men are raped annually than women (nearly 1 in 10 have been sodomized in prison according to a 2011 Justice Dept. study)
And ignore the fact most prison food is rancid and not edible because of financial deals made between prisons and the food suppliers that the differential between what some state governments are allotted for food and what is spent, is divvied up among the correction officers..

Prisoners truly are modern slaves:

1) A slave is forced to work under threat of physical or psychological threat.
2) A slave is considered owned property, an asset or commodity which can be sold.
3) A slave has restrictions on their liberties, including freedom of movement.
See the connection yet?

In addition, prisoners can be denied communication with their fellow inmates, or forbidden from voluntary associations including union membership.  Clearly, they are denied freedom to leave the prison, but they are also forced to work unpaid or for extremely low wages.

Prisoners are effectively being bought and sold to private corporations who are using them as cheep labor for private gains. There is also a market for younger and healthier prisoners because their healthcare cost make them less expensive to hold.

Private prison contracts allow the transfer of prisoners to state run institutions which is sorta like the days when an owner could sell his chattel to another owner without taking the slave into consideration..
Instead of breaking of families at the source like slavery of yore, now you force loved ones to travel hundreds if not thousands of miles farther to have any face to face contact during incarceration.

So lets get to the nitty-gritty of why prisons are so profitable and a great financial investment..

Right now as we write this there are almost 1 million prisoners doing simple unskilled labor including making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses, or manufacturing textiles, shoes, and clothing...

Now because these are slaves.. um.. we mean prisoners, they are not legally entitled to receive minimum wage which would be $7.25/hour received if outside the prison walls..

$7.25 x 8hrs labor = $58/day before taxes bare minimum for a free person
Currently prison worker bees are getting paid somewhere between 93 cents and $4.73 per DAY!..

All legal too so unlike your classic sweatshop, you never have to worry about the police coming in with full battle regalia and busting things up, which means no threat of law enforcement disruptions

In an article in CNN Money, clothing maker American Apparel expressed how this is destroying their business...

"'We pay employees $9 on average,’ [a company executive] said. ‘They get full medical insurance, 401(k) plans and paid vacation. Yet we’re competing against a federal program that doesn’t pay any of that.’

[The private prison] is not required to pay its workers minimum wage and instead pays inmates 23 cents to $1.15 an hour. It doesn’t have health insurance costs. It also doesn’t shell out federal, state or local taxes.”
As an investor looking to maximize profits, this means prisons are expanding their workload with new contracts coming in all the time..

Prisons currently subcontract for major Fortune 500 companies such as Chevron, Bank of America, AT&T and IBM

That person booking your hotel or plane reservation or answering a question about your checking account?

Yep.. Could very well be an incarcerated worker...

And you never have to work about a declining labor pool..  More people are arrested and incarcerated today for petty crimes and misdemeanors than ever before...

Coincidence?   Maybe..
As we said before, we're not being satirical..  Not this time..

Investors, especially professional ones are cold-hearted soulless, bottom-line number crunching bastards and one must talk their language when presenting any information in the realm of investing opportunities..

There will be some who will have read this posting and think "Ughh.. Dear God!  I'd never invest in That!'..

But trust us, others are thinking.. 'MMm, those numbers do add up don't they..'

But do as you will..  Its a free country..

Well.. on this side of the fence.