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False Information, Mass Psychology and this Hated Stock Market Bull


 -- Published: Friday, 29 July 2016 | Print  | Disqus 

By Sol Palha

As long as you keep a person down, some part of you has to be down there to hold him down, so it means you cannot soar as you otherwise might. Marian Anderson

Regarding today’s news, the average person is inundated with unnecessary junk. On any given day you will find experts telling you why the markets are destined to soar and or crash.  News outlets are desperate for eyeballs, so they are going out of their way to make titles bombastic, and or offering multiple scenarios so that when one of them comes to pass, they can proudly state we told you so.

The problem is that in most cases the information used to back these scenarios is utter rubbish.  On any given day you will find several compelling arguments that call for this market to crash or for this market to soar to the moon. Which one are you supposed to believe, especially when they appear almost simultaneously?  Spend some time on Yahoo or any other major finance site and you will see the common theme is bombastic titles trying to get the reader to click and read the article.  The most interesting part of the article usually is the illusory title, which hardly ever has anything to do with the article at hand. Today’s reporters like mindless bots assume they can continuously employ the same approach, and the masses will embrace them with the same gusto as yesteryear. Perhaps they are right and then perhaps again there is a trend change taking place.

This brings us to another interesting point.  The problem today is that the vast majority of individuals want to live the life of a king but on soldier’s salary. They want to buy things they do not need, with money they do not have to impress people they hate with their guts. Why would they want to do this?  Perhaps, the idea is to give their enemies the illusion all is well. Maybe they would be better off if they focussed more on themselves instead paying attention to the opinions of outsiders.

You see this trend everywhere. For example, take a look at what’s going on in the corporate world.  Corporate officers are looking for ways to improve earnings per share (EPS) without doing any hard work or coming out with any innovations. The trick, borrow money on the cheap and use it to buy back shares thereby magically boost the EPS.  

We have always stated that for any con to work you need two elements the conman and the person willing to be a victim. The share buyback scam continues because the public does not care what method is used to boost earnings as long as earnings look great. If shareholders cared, they would have made a noise long ago.  If you look everywhere, you see this trend of doing nothing and wanting more gaining traction.   When negative rates debut in the US, it will be like manna from heaven for the Corporate World; they will double down on their share buyback programs, providing, even more, fuel for this bull market.   Don’t for one second think the Fed is seriously thinking of hiking rates continuously.  The fact that they have done nothing after one miserable rate hike speaks volumes. Their game plan is to follow the rest of the world and embrace the era of negative rates. They have no option but to keep inflating the money supply to infinity or at least to the point when the masses finally state “no mas” and who the hell knows when that day will eventually arrive. A good guess is that many of those who have been waiting and continue to wait for that day will be gone before it comes.

 On that note here is a random slice of information; a superpower holds onto its position for roughly 250 years before it is replaced. America has held that position for slightly over 240 years; based on history the end is near and the time for a new head honcho is close at hand.

Conclusion

This stock market is supposed to crash and burn, and this is why it will not; it will crash one day, but that day is not upon us yet. The markets will most likely trade a lot higher than any of these naysayers could ever envision.  The Fed is far stronger than few hundred loud mouths that claim to be experts but, in reality, know next to nothing.  We are not endorsing the Fed, but the saying “do not fight the Fed” came into existence for a reason. Those who have fought the Fed since 2008 have been bankrupted several times over.

What the central bankers are doing is nefarious, but they have taken things to the point of no return and by sitting down there and complaining you are achieving nothing. The trend clearly indicates that the central bankers have no option but to inflate the money supply. Translations markets will readjust to take this new supply of money into consideration.  All asset classes will adjust to reflect this devaluation, and some asset classes will eventually rise faster than others.  The stock market has adapted marvellously, and the gains have more than compensated for the currency devaluation. One other asset class that warrants attention is Gold and Silver bullion.  They both tend to perform well during times of inflation and or uncertainty. 

If central banks stopped supporting the markets, then the bull would drop dead in its tracks, and we would support the naysayer’s outlook that calls for this market to crash and burn. However, there is no chance of that coming to pass, so unless you love to live in an illusory world dreaming of a market crash is simply a waste of a good time.   Don’t fight the trend for the trend is your friend while everything else is your foe.

I cannot divine how it happens that the man who knows the least is the most argumentative.
Giovani della Casa

 


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 -- Published: Friday, 29 July 2016 | E-Mail  | Print  | Source: GoldSeek.com

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