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Why 95% of Traders Fail

Stock Market Truth Is Dangerous

Stock-Markets / Stock Markets 2016 Mar 11, 2016 - 05:11 AM GMT

By: Barry_M_Ferguson

Stock-Markets

The current bullish climb for US stock indices is now seven years old. Yet, many pundits, investment bankers, and even central bankers are warning that downside risk is growing. Maybe, but I believe stocks will likely continue their bull run. The February rally of 2016 was a clear result of ‘calendarization’. That is, the fourth quarter is always good so investors receive a pretty statement at the beginning of January. This makes all the lies the government tells about the economy seem copacetic. Central bankers and Wall Street shills make it so. Tired from a quarter of constant price manipulation, these manipulators take a few weeks off in January. Naturally without unnatural support, stock indices take a dive. Panicked at the thought of investors receiving a negative January monthly statement, the central banker manipulation crowd goes into overdrive in February pushing stock indexes back up so investor psyche will be soothed by a positive February statement. Still worried about negative first quarter statements courtesy of the January beating, the manipulators continue pushing indexes higher through March. We have seen this movie over and over. I call it ‘calendar-ization’. If clients ask what is happening in the stock carnivals, I check the calendar first. And like all rallies, this one was all based on lies (improving economics), false data (corporate earnings), and hope (central bankers will save us with more stimulus). The central bankers are throwing us a birthday party and it’s not even our birthday. So why are so many people pessimistic about price levels and the recent rally?


The truth can be dangerous. If readers are disturbed by truth, I would suggest they not read any further and tune in to CNBC for more ‘happy talk’. For those who want to know, read on.

I have been asked several times lately why stock prices are rising? They can’t just rise forever, can they?

I respond. Why not? If prices for thing-a-ma-jigs were priced in what-cha-ma-call-its, what would stop thing-a-ma-jigs from commanding more what-cha-ma-call-its every single day? Why shouldn’t thing-a-ma-jigs cost a million what-cha-ma-call-its? A billion? A quintillion? The first trick is to destroy the definition of the pricing mechanism. In our society, we use money to price goods. But what if none of us knew the real value of money? What if money actually had no value since the people that control the supply of money print it or create it to accomplish their mission (dominance over all of us through debt enslavement)? So what if no one understood the real value of stocks or the money they were priced in? How do we get disjointed from a true understanding of value?

Please read this next paragraph very carefully. This is a quote from current Fed Chair Yellen in 1999:

’Will capitalist economies operate at full employment in the absence of routine intervention? Certainly not. Do policy makers have the knowledge and ability to improve macroeconomic outcomes rather than make matters worse? Yes.’ -
Fed Chair Janet Yellen, 1999

Read that over and over until it is committed to memory. Ms. Yellen is clearly an elitist who thinks she and her fraudulent cronies are smarter than the rest of us. She thinks she is the only person on the planet who knows what the real price of anything should be. None of us oafs will ever be allowed to discover the true price or value of anything. So, she and her bank company, the Federal Reserve Bank (FRB), set stock prices everyday. Usually we can see the magical intervention starting at about 10:30 am and lasting until the Dow Jones Industrial average has risen at least 100 points. If needed, another magically rally develops in the afternoon. So why can’t stock prices rise to infinity? The Federal Reserve is a serial price manipulator and that makes them, as Thomas Jefferson once warned, ‘more dangerous than standing armies’.

This makes Ms. Yellen one of the most dangerous people on the planet. She is simply manipulating asset prices to keep us all calm. How does she get away with it?

“It also gives us a very special, secret pleasure to see how unaware the people around us are of what is really happening to them.” - Adolf Hitler

Neel Kashkari, Minnesota Fed head says big banks are still ‘too big to fail’ and they might need to be broken up to prevent another taxpayer bailout. Stated differently, taxpayers are still on the hook should banks fail again. And they will. This leaves voters with only one chance of survival. They must write me in as the next President of the US. I am the only candidate who vows unequivocally to terminate the central bank immediately upon my swearing in ceremony. Under my presidency, there will be no bailouts. Period. Why do citizens blindly go through their lives and not understand that they are just marionettes controlled by puppeteers?

“What luck for the rulers that men do not think.” - Adolf Hitler

The gooberment claims that consumer spending is fine. Meanwhile, Walmart is closing 240 US stores, Macy’s is closing 40 stores, Kohl’s is closing some stores, Staples is closing stores, and Sports Authority is filing for bankruptcy and closing a third of their stores. Exxon said it is spending $20 billion less now than in 2013. And yet, ADP says private payrolls added 214,000 workers in February, 2016 in spite of the fact that more small businesses (the source of job creation) are disappearing than being created for the first time ever. Oh, and China is readying pink slips for some 7 million of its workers. Yes, it is easy to see why the US gooberment is so effusive about the improving jobs picture. But we are not supposed to know the truth.

“Education is dangerous - Every educated person is a future enemy.” - Hermann Goering, Nazi

As I write, oil supplies in the US have reached an 86-year high. Oh, and the price of oil is up today. Why? It’s all about the banks, stupid. With oil prices below $40 per barrel, there is a growing fear that these oil companies (and all interconnected energy supply companies) will soon begin defaulting on their debt. Ah, here we go. If the energy companies default, bank earnings might feel the impact. Since the banksters have their protective armor in the institution of the central bank, this scenario will not be allowed. Thus, the price of oil must move higher regardless of reality. And so it is. Someone, most likely the Federal Reserve, is busy buying oil back up to prevent energy loan defaults. We can therefore think of the Fed as a banker prophylactic.

The Hillary Clinton camp said the email scandal is no big deal because there is no evidence that her server was ever hacked. US media propagandists say the same. As I write today, Russia Today reports that a Romanian hacker was extradited to the US for hacking Ms. Clinton’s server, hacking her email, and publishing some of those emails. And yes, some of those hacked emails were about Libya and Benghazi. So, it should be obvious to all that the public will never again be told the truth about anything from nefarious politicians. Therefore, corporate america will continue to lie about earnings.

Yeah, I know. Readers are thinking that President Barry (am I getting ahead of myself?) is using hyperbole. Not to pick on a particular company but Cisco comes to mind as an example. This is a big company that makes switches and routers. Earnings are always fine. Really? It’s actually a mirage. Cisco has to buy multiple companies during the year and they make sure to over pay. Why? Because the amount that is over paid goes out of Cisco’s bank account, back into Cisco’s bank account, and they pretend that the overpayment amount is now income. The overpayment is known as ‘goodwill’. They can write down goodwill anytime they want to reduce taxes and therefore improve income. Currently, better than 20% of Cisco’s book value is actually ‘goodwill’. Corporate earnings are mostly false data.

The US economy has now gone ten years with sub 3% growth for the first time ever. Yet, the Dow Jones Industrial average is up as of this writing by some 50% over the same time frame. Does anybody seriously still believe that economics or corporate earnings have anything whatsoever to do with stock index valuation?

GAAP earnings for S&P US corporations declined 12% in 2015. The difference between GAAP earnings and reported earnings was 25% - the second highest ever. 2008 was the highest. Stock dividend and buybacks reached $1 trillion due no doubt to the Fed’s ZIRP policy. Now we have experienced a phenomenal rally in February 2016 even with net equity fund outflows. Who then, is pushing up stock prices? I suspect the FRB is very busy buying call options.

The following is an example of the total confusion caused by artificial banker manipulation. From a MarketWatch article recapping stock action from March 2, 2016: ‘A somber take on the U.S. economy in the Federal Reserve’s Beige Book bolstered the view that the central bank is likely to be slow to raise interest rates this year…’ And from the very same article and the last paragraph: ‘Wall Street stocks surged on upbeat economic data…’ From the same writer of the same article, economic news was both good and bad. What?

Investors now find themselves in a new world. Truth, investing skills, data analysis, intelligence, and education are no longer employed. All we have is hope. Everyone hopes the Fed knows what they are doing. That’s a laugh! Everyone hopes that one of the american political presidential candidates can fix things. The left thinks the completely inept american government should control everything we do and run every business that operates. The right just wants to outlaw abortion. Meanwhile, Obama just mandated that companies with more than 100 employees will now be required to file a government report every month listing employees and their pay scales from 12 different categories so the gooberment can decide on whether or not sexual discrimination is taking place. Of course, there are already government agencies that deal with this and yet now, these businesses will have to go to the expense of filling out more paperwork that ultimately makes american business less competitive and less efficient. That’s the way politicians (all of them bought, bribed, and corrupt) view things. They now rule. They no longer govern.

Apparently unaware that socialism and communism has failed since the beginning of human evolution, some people still think the government knows best. Any yet, no one seemed to notice this past month when Iran said it needs to ‘privatize’ its car industry to remain globally competitive. What are other bankrupt societies (Greece, Venezuela, etc.) doing to try and revive growth? Privatize. They have realized that government destroys efficiency (US Dept. of Defense just built a gas station in Afghanistan that cost taxpayers $40 million dollars) and destroys affluence.

How do these elitists get away with it? Simple.

“Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.” - Hermann Goering, Nazi

And one more thing. The month of April has been positive for the last five manipulated years. If the Fed can’t get the Dow back in the green by the end of March, bet the bank on April.

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.


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