Best of the Week
Most Popular
1.U.S. Inner City Turmoil and Other Crises: Ron Pauls Predictions for 2015 - Dr_Ron_Paul
2. What’s In Store For Gold Price in 2015? - Ben Kramer-Miller
3.Crude Oil Price Ten Year Forecast to 2025: Importers Set to Receive a $600 Billion Refund - Andrew_Butter
4.Je ne suis pas Charlie - I am not Charlie - Nadeem_Walayat
5.The New Normal for Oil? - Marin_Katusa
6.Will Collapse in Oil Price Cause a Stock Market Crash? - OilPrice.com
7.UK CPI Inflation Smoke and Mirrors Deflation Warning, Inflation Mega-trend is Exponential - Nadeem_Walayat
8.Winter Storms Snow and Wind Tree Damage Dangers, DIY Pruning - Nadeem_Walayat
9.Oil Price Crash and SNP Independent Scotland Economic Collapse Bankruptcy - Nadeem_Walayat
10.U.S. Housing Market Bubble 2.0 Meet the Pin - James_Quinn
Last 5 days
Stock Market Test of Strength - 26th Jan 15
Is the Gold Price Rally Over? - 26th Jan 15
ECB QE Action - Canary’s Alive & Well - 26th Jan 15
Possible Stock Market Pop-n-drop in Store For SPX - 26th Jan 15
Risk of New Debt Crisis After Syriza Victory In Greece - 26th Jan 15
How Eurozone QE Works: A Guide to Draghi's News - 26th Jan 15
Comprehensive Silver Price Chart Analysis - 26th Jan 15
Stock Market More Retracement Expected - 26th Jan 15
Decoding the Gold COTs: Myth vs Reality - 26th Jan 15
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch - 26th Jan 15
Draghi's "No-growth" QE Money for Stocks, Zilch for the Economy - 25th Jan 15
Unjust and Undeclared Wars - 25th Jan 15
The European Central Bank Commits Monetary Suicide - 25th Jan 15
Stock Market ECB EQE week - 25th Jan 15
Gold And Silver Timing Is Most Important Element - 25th Jan 15
The Best Way to Invest in the Next Alibaba Internet Stock IPO - 25th Jan 15
The Outpatient Surgery Business Rains Cash into Healthcare Stocks - 25th Jan 15
Stock Traders Flock to Gold GLD ETF - 24th Jan 15
10 Reasons Why You Need an Offshore Bank Account - 24th Jan 15
Goldman Sachs Blankfein - Regulation is Like Background Noise - 24th Jan 15
Gold in Euros Surges As ECB To Print Trillion Euros and Greek Election This Sunday - 24th Jan 15
Gold Bear Market Rally or New Bull ? - 24th Jan 15
Euro-zone 'QE already Working' Says IMF Lagarde - 23rd Jan 15
ECB and EU LTRO and QE for Dummies: Or, Make These Trades - 23rd Jan 15
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices - 23rd Jan 15
Market Should Not Doubt' Mario Draghi ECB QE - 23rd Jan 15
Francs, Bonds, Barrels, and Bail-Ins - 23rd Jan 15
Are Plunging Petrodollar Revenues Behind the Fed’s Projected Rate Hikes? - 22nd Jan 15
Stocks Bear Market Lessons from History - 22nd Jan 15
Russia's Plans for Arctic Supremacy - 22nd Jan 15
166 Trillion Reasons Why Bank Stocks Are So Cheap - 22nd Jan 15
Will Gold Price Break Out Once Again? - 22nd Jan 15
The Cult of Central Banking - 21st Jan 15
Five Stock Market Questions Wall Street Hopes You’ll Never Ask - 21st Jan 15
China's Yuan Enters the Currency "Big Leagues" to Take on the Dollar - 21st Jan 15
Investor implications of QE by the ECB - 21st Jan 15
Deflation Bonanza! And the Fool's Mission to Stop It - 21st Jan 15
Messin' With My Financial Brain - 21st Jan 15
Are Stock Market Buyouts Checking Out? - 20th Jan 15
Legal “Steroids” Are Making This Tech Stock a “Buy” - 20th Jan 15
Are Stock Market Storm Clouds Massing? - 20th Jan 15
The Swiss Release the Kraken! - 20th Jan 15
The European Union, Nationalism and the Crisis of Europe - 20th Jan 15
Swiss Say No to QE - 20th Jan 15
Gold Demand Explodes as Volatility and Fear Stalk Market - 20th Jan 15
The Truth About This Stock Market "Meltdown" Indicator - 20th Jan 15
Markets 2015 More Of The Same? - 20th Jan 15
Is Market Sentiment Shifting to Gold? - 20th Jan 15
U.S. Dollar’s Major Breakout and Gold’s Simultaneous Rally - 19th Jan 15
Silver Price Breaks Out on Swiss France Euro Decoupling - 19th Jan 15
Gold Bullish Inverse Head and Shoulders Pattern - 19th Jan 15
Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve - 19th Jan 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of US Markets 2015 Report

The Mainstream Financial Media Wants to Brainwash and Bankrupt You

Politics / Mainstream Media Dec 09, 2010 - 01:31 PM GMT

By: DailyWealth

Politics

Best Financial Markets Analysis ArticleDan Ferris writes: The financial news media is conspiring to blow up your brokerage account and flush your retirement savings down Ben Bernanke's new commode.

I'm not saying the editors of top financial newspapers and magazines sat down together and hashed out a plan to brainwash you and bankrupt you. No, I really don't think they did that. It only looks like they did it...


The conspirator I'd like to focus on today is Barron's, one of the most well-respected publications in the industry. By the look of it, you'd think it made a bet that it could nail the best "cover story sell signal"...

The cover story sell signal is one of the best contrarian indicators around. Whenever a trend is deeply ingrained enough in the public mind to sell magazines off the newsstand, you know it's about to end.

For example, in March 1999, oil was around $15-$16 a barrel. The cover of The Economist showed a picture of two oil workers covered in the stuff, with the headline, "Drowning in Oil," implying weaker oil prices. That was the beginning of the massive bull run that eventually took oil to $147 a barrel in 2008. Another famous example is from BusinessWeek. In August 1979, the cover said, "The Death of Equities." Stocks bottomed in the second quarter of 1980, retested the bottom in 1982, and took off on the biggest bull market in history.

These days, you'll find the most irresponsibly ostrich-like, head-in-sand attitude on the cover of the November 29 issue of Barron's...

It shows a retiree lounging with a cocktail next to a waterfall of money. The headline promises, "How to keep the income flowing." The article inside is called "Going with the flow."

That doesn't sound very contrarian to me... It's essentially an invitation to throw caution to the wind and take on more overpriced risk. And the Barron's story is recommending a whole slew of risky investments...

Among the high-risk offerings touted by Barron's: emerging market debt, foreign government bonds, high-yield corporate bonds, Build America Bonds (subsidies for municipal bond issuers), senior bank loans, MLPs, dividend-paying stocks (well, that one's a pretty good idea, actually), variable annuities, and the one that's been going straight to hell faster than the rest of them lately, municipal bonds.

It's as though someone at Barron's sat down and decided to make a list of the riskiest stuff you could buy right now. Income – especially fixed income – is clearly a bubble. That Barron's is trying to sell this list of fixed-income and near-fixed-income investments as a retirement-worthy portfolio seems more irresponsible than usual.

It even tells retirees to take more risk, saying, "Generating a rich stream of post-retirement income these days requires investments that retirees once might have shunned."

Adding particular insult to injury, a smaller headline on the left-hand margin of Barron's November 29 cover says, "REITs have the right stuff."

I guess as long as you ignore the cacophonous crashing sound coming from the commercial mortgage-backed securities (CMBS) market, the equity in commercial real estate looks positively peachy. In particular, the delinquency rates on mortgage-backed securities secured by apartment buildings spiked more than 100 basis points in November, to 15.8%. That's from the same report by CMBS tracker Trepp that says the overall CMBS delinquency rate rose to 8.93%, up 35 basis points from October.

The loans underlying U.S. commercial real estate are blowing up at higher rates. But Barron's thinks the equity slice, the riskiest piece of the pie, is somehow appropriate for retirees.

Let me tell you something: If the bond holders aren't getting paid, the equity holders can throw their tickets in the trash, have a smoke and a pancake, and resign themselves to getting crushed.

And like every other kind of yield, REIT yields have compressed like prosciutto under a Sumo wrestler. The U.S. Real Estate Index dividend yield has fallen from 11.19% in February 2009 to less than 4.6% today. For taking on all kinds of risk, you're paid just a little more than 30-year Treasurys.

That's a bad deal. And you should turn up your nose.

Barron's and the rest of the financial news industry is a shameless tout machine, by all appearances in the direct employ of Wall Street, the Fed, and anybody who's already got a ton of money. It's forgotten how to say, "Inflation is bad for business, and what's bad for business is bad for stocks. Sell fairly valued stocks. Hold cash. Buy only when valuations are dirt cheap and business quality is stellar."

See, that wasn't hard. Sure, subscriptions to my newsletter, Extreme Value, won't fly off the shelf with that kind of advice. But at least we'll all sleep soundly, knowing we understand exactly what the heck is going on.

Good investing,

Dan
Editor's note: Dan Ferris is the editor of Extreme Value, which boasts one of the most impressive track records in the business. Over the past six months, Dan has closed out winners for 249%, 248%, and 104% gains. And he has four more triple-digit winners in his open portfolio. To learn more about Extreme Value – and get immediate access to Dan's latest research – click here.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014