Best of the Week
Most Popular
1.Spain Ignores Scotland Lesson as Catalan Independence Referendum Could Spark Civil War - Nadeem_Walayat
2.Used Car Buying From UK Dealer Top Tips, CarMotion.co.uk Real Customer Experience - N_Walayat
3.Spanish New Civil War Begins as Madrid Regime Storm Troopers Quell Catalan Independence Rebellion - Nadeem_Walayat
4.Virgin Media Broadband Down, Catastrophic UK Wide Failure! - Nadeem_Walayat
5.Are the US Markets setting up for an Early October Surprise? - Chris_Vermeulen
6.The Pension Storm Is Coming To Europe—It May Be The End Of Europe As We Know It -John_Mauldin
7.Stock Market Crash 2018; Will it Prove to be Another Buying Opportunity - Sol_Palha
8.The Profoundly Personal Impact Of The National Debt On Our Retirements - Dan_Amerman
9.Stock Market as Good as it Gets; Like 2000 With a Twist -Gary_Tanashian
10.1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - Nadeem_Walayat
Last 7 days
Stock Investors Ignore What May Be The Biggest Policy Error In History - 20th Oct 17
Gold Up 74% Since Last Stock Market Peak 10 Years Ago - 20th Oct 17
Labour Sheffield City Council Employs Army of Spy's to Track Down Tree Campaigners / Felling's Watchers - 20th Oct 17
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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

© 2005-2017 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

Catching a Falling Financial Knife