Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16
The Peak Oil Paradox Revisited - 19th July 16
SPX Challenges the Upper Trendline - 19th July 16
Missing ’28 Pages’ of the 9/11 Report Released into Blitzkrieg of World Events - 19th July 16
Likelihood of Organized Disruption at GOP Convention - 19th July 16
More on the ‘Breadth Thrust’ and Stock Market Internals - 19th July 16
FX Traders: Get a Free Week of Forecasts (Details inside) - 19th July 16
Ups and Downs in Gold and Crude Oil Price - 19th July 16
Keep an Eye on ‘Bitcoin’ as the Next ‘Financial Crisis’ Starts! - 18th July 16
Erdogan Might Have Known about the Coup but Didn’t Prevent It on Purpose - 18th July 16
More Deflation Ahead: Silver, Gold And Their Mining Stocks A Must-Have - 18th July 16
Stock Market Minor Top? - 18th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Forex Forecasts

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

© 2005-2016 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