Don’t Throw Money At This Piece of Garbage

The Dow Jones Industrial Average continued its meaningless assault on 20,000 last week, at one point on Friday trading within 0.37 points of hitting the target before closing up 1.02% for the week at 19,963.80.  The S&P 500 rallied by 1.7% to finish at an all-time closing high 2276.98 while the Nasdaq Composite Index also hit a new all-time closing high of 5521.06.  I don’t have the vocabulary to express how unimpressed I am with all of this nonsense.

The fact that the market is rallying with the economy so weak may or may not be surprising or justified – markets are often driven higher by sentiment – but needs to be seen as a very fragile state of affairs.  Chasing stocks at their current values is a risky proposition.

While the headlines were all making happy talk, under the surface investors were throwing money at some of the worst pieces of trash out there.  While struggling retailers like Macy’s, Kohls, LBrands and others took it on the chin after reporting lousy fourth quarter results, investors marked up the stock of Sears Holdings, Inc., which pre-announced another quarter of double digit same store sales declines and sold one of its last crown jewels, Craftsman, and borrowed another $1 billion from its controlling shareholder to stay afloat. By Friday, however, Sears stock was dropping hard again.

The same thing is about to happen to this garbage stock.

If you’re smart, you’ll get out now and make a profit instead…

Continue reading…


This Investment Strategy Is Completely Driven By Fake News (And It’s A Real Danger)

“Fake news” is a particularly provocative concept applied to market forecasts now that central banks have destroyed free markets and free thought after the financial crisis. Guesses about where the market is going – and believe me, they are only guesses, some more educated than others – may appear to be grounded in facts and figures but ultimately tell us more about the psychology of the forecaster than anything meaningful about the markets.

Right now, there is overwhelming consensus among forecasters that 2017 is going to be a good year for stocks and a bad year for bonds. The fact that virtually no strategist, and certainly no strategist working for a large financial institution, is calling for stocks to decline should be taken with a grain of salt. They never call for stocks to decline (and if they do they are dismissed as “permabears” and treated with disdain). They are paid to publish bullish forecasts, which renders their advice worthless. Broken clocks can’t tell time. Like large metropolitan newspapers (you know which ones I’m talking about) whose readership is plunging because news is freely available elsewhere and their tired editorial views are discredited by the experiences of their readers, Wall Street is digging its own grave through its own obvious inauthenticity.

That inauthenticity is especially toxic when it leads to passive investment strategies like this one.

This investment vehicle is the perfect product for a world of fake news, as it relies entirely on the suppression of individual thought. It is a disturbing rabbit hole of consensus thinking and if you fall down it, you may never find your way back out.

I nearly got sucked down this hole myself a couple of years ago. Here’s how you can avoid it. Continue reading…


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