Investor Solvency and Market Sanity

By: Barry_M_Ferguson

We all know the old saying that ‘the market can remain insane longer than investors can remain solvent’. We are now living the phrase.

4/13/16: JP Morgan bank released quarterly results. Earnings were down 6.7% and revenue was down 3% (even by fraudulent bankster accounting). The stock price went up over 4.5%. Schazaamm!
 
Ditto for other big banks Bank of America, Wells Fargo, and Citigroup. Earnings and revenues were down. Stock prices were up.

Peabody Energy, the largest coal producer in the US, declared bankruptcy today. The stock price only dropped by 2.3%.

Consumer spending fell in March. The consumer goods sector was up over 1% today.

An FRB member said the Fed could still raise interest rates four times this year. Is there a psychiatrist in the house?

CSX said rail freight dropped by 5% in their most recent quarter. No worries - the stock price rose more than 4%.

Industrial production through March of 2016 has fallen in 6 of the last 7 months. Yet, the industrial ETF XLI is up some 3% in the same time frame. In a Reuters article explaining the decline, we are cheered on by the article’s writer wanting us to believe the ‘Worst likely over’. Why? Because, according to the article, industrial production has been falling because of the ‘slowing global economy and the robust dollar’. Actually, in this same time frame the US dollar has declined some 4% (as measured by UUP) and global growth continues to slow. So why is the ‘worst likely over’?

I really hate to be so repetitive but the driver of stock price appreciation has not changed nor relented. The Federal Reserve Bank continues to spur on stock prices to cover the Fed’s own thievery and fraud.

Fed Chair Yellen was on stage with past heads Bernanke, Greenspan, and Volker this past week. Listen closely to the biggest criminals in history. Bernanke said two things.

First, he tried to convince listeners that QE was over. It’s not. The Fed is still buying Treasuries and mortgage paper with maturing paper that they have already stolen. Why are US Treasuries still in rally mode? Because the Fed is still buying them like Emory University students are buying underwear given that they apparently soil themselves every time they hear a scary name like ‘Trump’.

Second, Bernanke addressed the FRB’s ‘exit strategy’ from their massive $4.5 trillion of looted assets. He said at some point that the FRB would simply stop reinvesting matured notes and the balance sheet would normalize. Really? That might fly for the average ignorant american (sorry for the oxymoron) but not me. The only way this happens is upon maturity of notes, the FRB returns the principal back to the Treasury. Does anyone actually believe the FRB would give back the $4.5 trillion in stolen US assets?

So now, as insane as it sounds, the only thing that matters is the calendar. It starts in the fourth quarter. Remember, 80% of asset appreciation occurs in the fourth quarter going back at least for 15 years!

The Fed wants investors dumb, completely hoodwinked, and happy. So, they goose up the stock indices in the fourth quarter so the annual portfolio statement looks pretty in January. The FRB takes the month of January off so the indices collapse. See the 10% decline in the month of January of 2016.

This gives the FRB, the gooberment, and the cheerleading shills like CNBC time to think up lies about how great things really are and why the indices are a good buy. Then the FRB goes to work in February and March. See the 10% index rise in February and March of 2016. Investors begin to worry about the insanity of such price movement. To cover their fraud, the FRB keeps the pedal to the metal in April as every April becomes a positive month for stock prices.

If the FRB pushes the indices far enough into positive territory, they take off May and June. Without FRB intervention, stock prices slide in the summer only to be jolted higher by a rally from nowhere at the end of the season. September can be a down month but then, the fourth quarter is back and…, well, up, up, up go the indices.

Now, the insanity is that none of the above is based on reality or truth. Forget all that stuff I wrote at the beginning of this article. It just happens for the manipulation of investor psychology. The best tool of modern investors is to be completely stupid and ignorant of everything. Just put some money in stocks and wait for the FRB to blow some more air into the bubble. Now, I’m talking about being really, really stupid. How stupid? Well, the most successful investor will be the investor that doesn’t even know the FRB exists. Or, maybe an investor that thinks the FRB is part of the US government will do well.

Otherwise, intelligence and prudence would surely compel investors to sell stocks short as asset prices continue to rise in the bubble. However, the expanding bubble puts pressure on the solvency of the intelligent. This is where investors must strategize.

The best thing to do is to watch CNBC and listen to every idiot they parade on the tube. What’s good to buy? Everything! When should we buy? Now! The train is leaving the station. Is there any risk? Of course not. Ever heard of the FRB? What we need to realize is that our world is now run by the insane. The insane rulers will eventually bankrupt the knowledgeable and challenge solvency. Stay stoopid! Uh, I mean ‘stupid’.

Oh, and don’t read articles like this. Knowledge is poison.

Let me close with this example of insanity. Why do the Sanders backers want free college education? If they get their wish and the US adopts socialism in which the government takes care of everyone from cradle to the grave, why then would anybody need to waste time in college? If graduates get a good job, the socialist government will just take all their money and give it to people going to college for free. So, why go to college if the government takes care of everything?

Like I said, stay stupid, my friends! Your portfolio depends on it!

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2016 Copyright BMF Investments, Inc. - All Rights Reserved
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.