Readers, who have followed me as far back as last Easter, routinely ask how long I think I can keep "beating" the market.

My answer is that as long as there is an influential sell-side, I will "beat" the market, and so can you and others.

Here is my rationale. It's all about the opportunities that result from the impact of the financial services industry on the capital markets.

You do know, of course, there is a difference.

The "capital markets" are the constant dynamic in the form of transactions that exists between the owners and managers of capital. I refer to these players as the buy-side.

"Financial services" is the aggregation of all regulated entities and matters pertaining to the selling of services and goods related to banking, investment, and insurance. I refer to these parties as the sell-side.

Most people are not aware just how extensive are the sell-side's overhead costs and profits, which they extract from the capital markets in the form of fees, charges and trading profits. I venture to say the total amount could be at least $1 trillion annually.

That trillion dollars is the amount that all the broker-dealers, banks, mutual funds and others on the sell-side take from the direct and beneficial owners of capital in return for adding, in the main, no value, or dubious value at best, to the client. They tell us that their goods and services are essential to us, but I know otherwise.

I'm not referring to valuable services of the sell-side like credit extension, risk management or corporate finance (IPO) services, but to the part of their income-generating activities that involves being intermediaries in capital markets, as well as the additional opportunities that situation provides.

To be able to generate fees from selling goods and services, it is an undeniable fact that the sell-side must manufacture and embellish stories in order to amplify price cycles, which the sell-side then exploits by trading against its clients.

I think society should not permit that highly conflicted practice by the sell-side, but I admit there are laws and rules and regs that do allow it, so I deal with it in the best way I know; I turn the tables and trade against these financial services companies.

As you know, I say there ought to be laws preventing the sell-side from maintaining the pretence of also being your financial advisor in addition to selling you their goods and services. But, my key point in this website and blog, and the one I am making today, is that astute traders can exploit the amplified trend and cycle opportunities that the sell-side creates in order to sell their goods and services.

In other words, I don't let them have their cake and eat it too.

At some point the majority of the public will see that their personal sell-side "advisors" are not making them fair market returns, and they will stop buying those costly goods and services. Society will start demanding changes to securities laws.

Here is a key point you ought to consider: For you or me, who are the owners of capital, the costs to exploit the sell-side " by buying when they buy and selling when they sell, and telling our peers what we are doing when we are doing it -- are virtually nil.

Now you might say these costs ought to be nil, but in fact the sell-side has imposed a body of laws, rules and regs upon the buy-side that restricts our principal activities in short-selling, day-trading, dealing with hedge funds, and so forth. And I'm not talking about our crossing the line to act as both principal and agent as the sell-side permits their side.

I refer strictly to our (buy-side) actions as principals in the self-directed management of our own capital, which you would think being our own capital we had sovereign rights and control over. Alas, even in the United States or Canada, we do not because, as much as I hate to say it, we are chattels of the state.

For years, we on the buy-side had to pay enormous costs just to access our own markets, pay for research, etc. We couldn't short on downticks. We couldn't buy certain funds, or use the services of certain qualified advisors, and so forth.

Self-managed trading was not even permitted unless we paid something in the order of 3 percent for each buy and each sell transaction. Can you imagine paying six percent just to make a single round trade in securities? How could you make a fair investment return?

But all that has gone away or, at least, is going away.

Of course, this newfound power is now ticking off the sell-side, who see people like me (and maybe you) trouncing them with effective market timing and rapid turnover of trading positions, so they have tried to do it themselves " some of them without the full disclosure required by their industry regulations.

That insider trading practice by mutual fund managers, has been stopped by the regulators, and sanctioned by fining the sell-side miscreants over $1 billion. But that sanction is an attack on the symptoms, and not the cause, of the problem, which is that the sell-side is in control of the capital markets.

So while I say that there are reasons to clearly separate the buy-side from the sell-side, the fact is that the sell-side has managed to pervert the capital markets by acting as both agent and principal in the same transactions.

But at what cost to themselves, and to the owners of capital who ultimately pay these costs?

Financial service firms " the sellers of goods and services " have, as you know, generally proven in capital markets that they are better marketers than traders.

That's a little like lawyers (agents) who serve to facilitate transactions but who seldom prove a capacity to generate the substance of a transaction (as principals). But I digress.

Some people in the financial services industry are starting to "get it" and they are exiting their sell-side employers. I see evidence daily of people leaving Humungous Bank & Broker because they see the writing on the sell-side wall, which is that conflicts of interest are no longer acceptable to the public no matter what rules the sell-side has managed to foist upon the public.

Many sell-side departees are now establishing value-adding independent research or asset management boutique services for buy-side traders, but the big banks are trying to discourage this practice by suing their ex-employees, which I find interesting in that it shows me the sell-side can't cope with intelligent people, and they don't respect the needs of the client.

There is a heavy cost to maintain a sell-side presence, both in principles and in accounting terms.

Being non-commercial, I am a one-person operation. My priorities right now are: parents, family, trading, website and then blogging (when I have time).

I don't have an employer. But, as an unregistered person, when I want to write an investment report on a particular stock, say, I have almost zero costs involved, and I can conceive, produce and publish that report to the world in maybe two hours.

For say a Merrill Lynch to publish anything comparable, there would be at least 100 people involved -- from researchers, support staff, sales staff, managing staff, compliance staff, legal staff, and so on, and that report would take maybe one month to get to readers, and the cost is probably $1 million (100 x $10,000 per person-month in labor, materials, overhead).

So, you see, it's not fair competition. Merrill Lynch can't win.

It's the system that ML created to be able to play both sides (agent and principal) that is killing them " not the fact they don't employ skilled traders.

They could only win if they produced a superior report, but anybody can see that ML cannot out-perform the market, because of the costs involved, and they can see that I (and others) can beat them at their game (because of the advantages we seek out and take).

Here's an example: Last October 23 (a Saturday), I wrote a sell recommendation on Alcoa with AA at $31.66 (Friday's close). I gave my explanation for buying a put on AA: "The AA=MZ (Jan-05 32.5) puts are costing me ~$1.26 time premium. I anticipate AA to re-test its $28-29 base (say -10%) within 60 days, based on a fair value price of 18 times 2004 earnings of $1.56e ($28.05). That would be a test of the May-10-04 low. If so, the puts @ $2.10 would double, for a 100% gain. This is a trade that could have easily been put on @ $1.20 a couple days ago when I knew 99.5% of the information used to make this trade. But, this is a Weekly Ezine."

Then, before the market opened on Monday, Merrill Lynch published a strong buy recommendation on AA, and immediately I said that I would take that trade even though ML's global marketing power would defer my anticipation of market events by a month (which simply means, "wait until the stock goes up a bit and then put on the put trade" because nothing's changed.

What happened is that for the next 3 to 4 weeks, AA moved up to $35 and then over the subsequent 8-week period dropped 20 percent to $28. So, not only did my put recommendation work out; but also additional puts taken to "play" ML clients who were buying their lemonade, would have worked out even better.

Sooner or later, all my readers are going to "get it". The fact is; your financial advisor is not an "advisor" but a sales organization, and one that also trades capital against its clients. That is an irrefutable fact and I challenge anybody to dispute it.

When it comes to money, there is no place for conflict of interest.

The bottom line is that the sell-side is in self-survival mode. They are constantly lobbying governments in every country to enact legislation that helps ensure the status quo, and they have managed to put their people into the lead positions of the public securities regulators.

Being a realist, I don't see help from securities regulators to resolve the buy-side's need to have fully independent agents and advisors. In fact, once I came to understand what life is all about, I saw clearly that laws, rules and regulations are put in place to ensure the status quo for the elite.

They are not there to protect the little guy, no matter what anybody says.

One development in recent years that I think will help the public get released from the hooks of the sell-side appears to be coming in the form of electronic trading, automated trading software and free ASP services like Yahoo Finance.

That happens to be an area of interest to me because I am a devotee of personal sovereignty and self-directed action.

So there is hope, after all, and not surprisingly it's because the public, the owners of capital, the buy-side, are just taking it. Actually, there is no way the sell-side can stop them. There are no physical barriers to the digital world; hence there is no practical way of imposing jurisdiction.

We are now people of the world, and the world's individual taxing jurisdictions are struggling with that reality.

On a personal level, in a couple months I am going to link my algorithmic trading models to a query facility on another (premium) website. I just have to make a decision as to how to do this at minimum cost in dealing with sell-side rules and regulations.

You see, wherever you go in the world, there are rules and structures for society. It's just a matter of finding a place that best fits one's needs.

With me, that is a dilemma, but one that will soon be resolved, I think.

The good news is that I'll be using those proprietary algorithmic trading models for my own trading, and writing, and I'll be tweaking the trading models every day to try to produce good results for both free and premium subscribers.

I'll keep writing free, but the 'on demand' recommendations (1200+ stocks) will cost for access. If my "recommendation engine" turns out to be as effective as my personal trading decisions, there will be a public demand for it. I say that simply because it's a huge capital market and I, or any one person, can personally keep track of very few positions at a time.

The database is huge because it is being built (presently) to incorporate dynamic price changes in all the capital markets -- equities, market and sector indexes, bonds, commodities, gold, forex, etc " linked to trading rules-based algorithms I developed over 30+ years.

My retirement will then be spent trying to improve my automated model, so that it ultimately makes 100 percent of my personal decisions and I can spend almost all my time travelling and enjoying the non-capital market interests in my life.

With all that has gone on in my life in the past 14 months, I look forward to it.

I will be off again today as I am preparing to leave town to visit my parents again, which as I say is my first priority at this time.

BCara@BillCara.com