Putting The Fallacy Of QE Into Perspective

You can’t turn on a financial news program without being bombarded by panelists as well as the hosts ready-at-the-draw to pounce on anyone with an opposing view as to the “effectiveness” of the Federal Reserve’s quantitative easing program (QE).

Once again this played out just the other day on CNBC™ where this time it was Peter Schiff who found himself in the cross hairs of today’s version of “ambush the guest.”

You can agree or disagree with anyone’s viewpoint and I even encourage people to question mine if they see fit. However, you don’t have to be a rocket scientist to watch many of these anchors to witness for yourself what now has turned into all the appearances of – an ambush.

And the recurring foil used to defend their attack? (paraphrasing but it’s the gist) “You’ve been wrong about monetary policy for if you were invested in this market, you would be making money. And those who have listened to you have missed out. So won’t you now admit you were wrong?!”

Schiff wasn’t the first nor will he be the last and can defend his own calls and does so. But no one on these shows cares. And this is clearly visible for all to see in these exchanges.

You hear calls of “Admit it!, Admit it!” over and over again as someone is trying to clarify a position. Clarify in the real sense of the word. Not obfuscate it as the hosts or other “guests” are trying to imply by shouting over them.

It’s now gone from amusing to watch, to down right pitiful. Many times I’m left watching these hosts channeling that old quote, “Do you have no shame?”

I believe this shoe now fits a few too many feet today. And many of them can’t get the boot quick enough in my opinion.

So let’s put a little perspective on this whole thing we now know as QE and shed some light on the “brilliance” and the “understanding” of monetary policy that many of these so-called financial show hosts state they know so much about.

First: What great economic reason would they give that stopped the Dow 30K narrative in its tracks to then watch it plummet wiping out all the gains of 2014 – to then reverse and edge back towards the “Never before seen in the history of mankind highs?”

There was only one: Federal Reserve Bank of St. Louis president James Bullard. Period.

All one has to do is look at a chart for proof. Chart Courtesy of ZH from the article: Chart of the day: Bullard Bull#*t

Screen Shot 2014-10-29 at 11.27.44 AMWhat more about monetary policy gone wrong does one need to know than to look at that one chart and see for oneself. Proof, that the policies we once knew as “monetary” have been so adulterated that the charts are now the equivalent of pornographic pictures.

Maybe what we really need is for all these charts to be bound in some magazine with an “adult advisory label” affixed to it. At least it would be more of a true descriptor than what we are told it is: “The picture of a real economic recovery.”

But in reality it goes a lot deeper than this. It is absolutely lost on nearly everyone exactly just how much money the Fed has really injected into the system with nearly nothing to show for but a stock market so fragile: a non voting FOMC member can shake its foundation sending it tumbling wiping out a years worth of gains in days. Then, just by reversing that statement reinstate it back to its lofty highs.

And the statement? (paraphrasing) “QE should end” “QE should continue.”

Sorry things like that don’t happen in a market based on true economic principles and activity. That only happens when you have a sham of a market.

Remember, the Fed has injected into the market nearly 4 Trillion dollars. That’s $4,000,000,000,000.00

To put this into perspective I wrote back in December of 2013 an article that brings into focus exactly what we’re talking about here.

Imagine if for the same amount of money we had done the following.
(Just to be clear – this is not an endorsement. It was only an exercise as a thought experiment for you need “big things” to really appreciate just how “big” these numbers truly are.)

From the article in December 2013: Perspective Is Needed More Than Just Numbers

“In just 3 years the Federal Reserve has pushed into the financial markets via the QE programs the equivalent in dollar amounts to have purchased 510 B-2 Stealth Bombers, 72 Nimitz Class Air Craft Carriers, 120 Ohio Class Submarines. and I still have nearly 2 more years of money to appropriate where ever or for what ever I desire. i.e., Two TRILLION is still in my pocket left to spend. QE and its equivalents are now nearing 5 years.

I still have plenty left to buy the aircraft, to man them or, the missiles to outfit them. Heck, that’s just if I stop here. So far there is no indication the Fed. is going to stop and there’s also talk that the new Chairperson might be inclined to spend more!

Maybe we should add a few M1 Abrams tanks just for the fun of it. They’re about $7 Million a piece so we can get Oh let’s say TWELVE  THOUSAND a month. Yes that’s 12,000 per month or One Hundred Forty Four Thousand (let that number sink in – 144,000) in a year. Sounds like a bargain when I state it that way doesn’t it? And I would still have a Trillion left if they stopped printing today.

But here’s the real crux of this argument and why I stated it as such. Sure it’s a little hyperbole and the math is not exact. We would never do now nor would anyone ever approve of such a plan. However, think of where GDP and the economic output as to where it would be today as to employ the talent needed to build those marvels. The engineers, the skilled labor, the steel, the copper, the mechanized equipment, the hotels, restaurants, and more to feed those that just supply the day labor, never mind the industrial backbone of supply that would be needed and more.”

As far as what we have to show for all this spending at the end of QE this month? Who knows, but I do know – we didn’t even get a lousy T-shirt.

© 2014 Mark St.Cyr

 

When Assurance Is Not Enough

If there’s one thing I’ve been adamant about since I’ve started my site along with other projects is this: You are either in business – or not. Period. And once you’re clear on that one point all – and I do mean all – your criteria for decisions on what, where, and how to go about things must change. i.e., If you’re in business you need to do this, if you’re in a hobby or vanity business you may not need to do that.

However, again, I can not stress this point enough: If you are in business – some things you can not leave to “assurance” you must have “insurance.”

The difference between the two will be realized at the worst of possible times for many who thought “Well they said” matters. And when your money or repute is on the line. “What they said” can cost you plenty, and maybe far more than you ever dreamed when they do the exact opposite of “what they said.”

To help illustrate this I want to share in real-time a situation I myself have found myself in and how I had an “assurance” but could not get an “insurance” where I responded accordingly. Even though at the time many might have thought “Oh you’re just making a mountain out of a mole hill.”

It’s for this exact reason I wish too show just how fast that proverbial pile can mount at the most inopportune times.

I had hosted my original .com name and others on a separate platform for years. I have had other WordPress™ sites for nearly as long. I always kept the two separate for differing reasons of down the road expansion ideas etc. For you can do somethings on one and not the other and so forth.

However, as of late my footprint or reach has become far too large and I had the overwhelming fear that I could at any time spike in traffic where my allotted bandwidth would be exceeded. And although my bandwidth was relatively high, in a spike I could incur what I deemed as massive over-charges. The scale and the amounts were huge. (just to be clear I’m talking thousands of dollars not a few hundred.)

Many people would love to have this issue, but trust me, when it becomes very real, love isn’t the word that comes to mind. And with that I contacted my host and asked very pointed questions. e.g., “If I were to have a spike over my limit can I limit the amount over in which it is allowed?” “If I can not can my site be set to shut down as in not be available until I contact you and set up a high limit plan?”

Along with describing my why’s: “The reasoning behind these questions is this: I do not want to incur overage charges on the possibility where I get spiked for either one of my articles goes viral, or – I get a spike in site hacking such as a DDNS and the like.” In my case these had become valid concerns and needed to be addressed.

To make a long story short the responses came back after multiple emails where I was told to rest “assured” that if such happened they would “work with me.”

Also, I was “assured” that in the case of such an event that they were very “generous” on first time issues and would help me resolve these issues should they arise. What I could never get them to do? “Insure” me by stating they would shut down my site at my limit till I contacted them. Or, that they would only allow X amount of usage over my limit to insulate me.

No – all I could get were the equivalent of “assurances.” In a business – that’s not acceptable in some cases. And in my case I had to make a decision, so, I moved my site where these issues were resolved.

Which brings us to today.

As I write this, I have now had nearly 2 months of week after week, after week of emails with (my prior host) their support team that keep apologizing to me for the “frustration they know I feel” that someone has not responded to my request so I can access a domain name I have registered through them.

I have no access, can’t do anything with it, it’s an important name, and although I was a very happy customer of theirs for nearly a decade with their web service they have chosen to not only disregard my requests but in effect are holding a business name that I own hostage where I can’t gain access to it. All the while I have been told by support that this issue has been “escalated” to the highest of priorities.

So here’s my take away point for you to consider and why I say what I say: What if this was in reference to a bandwidth issue where my original concerns were?

In a bandwidth issue my billing information such as credit card or other is on file and can (and more than likely will) be charged immediately. Even if you had “assurances” they wouldn’t.

Then what? Dispute the charges? Could you? Would it stand in a small claims court? How would you prove you didn’t owe them? Would your credit get dinged because they throw you (or sell you) to a collection agency?

Without a clear provable statement of fact between you and the other party where you can produce “I have it here in writing they said they would not” all the assurances in the world will do; is leave you to “rest assured” you’re going to have some very big if not costly headaches down the road at the most inopportune times.

Make sure you know what you think you know, and have the proof, that all of you, are on the same page. Because the “assurance” you’ll have a leg to stand on when it comes to your money is far different from “insurance” when one of you is going to have to pay for that leg.

© 2014 Mark St.Cyr

“+” What Is It Good For? Plus More!

I was sitting down contemplating exactly how I was to go about with a few projects I’m currently working on such as my next book, audio/video projects, speaking projects and more.

As I sat gazing and daydreaming for some reason Google™ popped into my mind, then its “plus” service; and almost immediately I began channeling Edwin Starr’s classic song WAR (Whitfield/Strong -released1970 Motown) as I inserted the word “plus” for “war.”

And yes, daydreaming is a valid and productive process to do, and far too many have forgotten just how important it can be for they have replaced it with unproductive busy work. i.e., Checking in on their social status every 10 seconds. But I digress.

The more I thought about the service, the louder the song seemed to grow in my head. And with that I decided to delete my account and I thought I’d share my reasoning why, for as many of you know I like to use myself as the example where appropriate. Not the all too prevalent…

They read in someone’s book where they read in someone else’s book, that someone wrote about someone else, where they were reading someone else who was writing, where they chronicle a group of other books written by someone else. And while they’ve never done any of it, they’re now writing about what they wrote, so that you can now go out and buy their writings – on what they think you should do. Even though they themselves have never done it. Sorry, once again I digress. But I believe wholeheartedly that point is not made near enough.

So getting back to my reasoning and trying to stay clear of a rant, here is what I’ve both noticed, believe, and other details that have been borne out in absolute fact, not conjecture, or “a reading of tea leaves.”

First: During what is now known as the “social media revolution” you won’t get 1 out of 100 people disagreeing that today the only way to get known, promote, sell, and more is: via social media. In other words you must be on “all” the platforms. e.g. Pintrest™, Facebook™, Twitter™, YouTube™, et al. You must have followers, likes, comments, write for SEO and more. If not – you’re not only “not serious” you’re probably doomed for failure. Only problem with that? It’s bunk. Pure unadulterated trash. Period.

Now why can or do I make such a statement? Easy, it’s because ever since I started – I’ve done none of it.

Oh yes, like many I too at first opened an account on many of these platforms. But after posting maybe once or twice (if at all) I instinctively felt it was all just a waste of time, especially in a true business sense. And so far it’s been proved out my thoughts and realizations were correct. And again – I backed up that argument by not doing any of it. (I can hear the gasps from new readers thinking “That’s blasphemy!”)

However, for those maybe not familiar with my thoughts on this subject let me add to this for there may be a little confusion. i.e., “How do you say social media (SM) is worthless yet you have sharing buttons?”

I didn’t nor don’t say SM is useless or worthless for everything. There are very valid uses as well as fantastic ways for things to be shared, talked about, and more. But (and it’s a very big but) as far as the way its been touted for use to help businesses and entrepreneurs? Not so much.

And I’ve been adamant from the get-go and have stated unabashedly “The only people making real money on social media, are the people selling you their products “on how you need to use social media.” And I still stand by it. It could change, but as of this writing that’s still my viewpoint.

So I thought I’d change the discourse from me just typing to something more along the lines as if you were watching me on stage using some real answers I give when I’m asked very direct and pointed questions from the audience on this very topic in conversation form.

I believe it will help in facilitating as well as giving more understanding of where I’m personally coming from; for there is probably no other topic that people want to try to “skewer the speaker” with as to prove them wrong.

And maybe it will help you also should you decide to follow an even different path because you will be called out as to “explain” yourself.

So with the help of V.V. from StreetCry we put together the following. Just suppose you’re a person in the audience and you were to hear the following questions directed at me from the audience:

Question: You say you don’t use SM yet you have share buttons on your site. Can you explain this?

Me: Sure, I didn’t say there is no purpose for it. I said as far as basing a business on it is what’s getting people in trouble. If people find something on my site that they find interesting and want to share it on say FB or something else, I’m pleased. And I have them there for just that reason. Yet me wasting my time to get them to read me on FB – rather than my own site – seems counterproductive does it not? Thanks, and next question…

Question: In a world now seemingly dominated by the likes of Twitter, how can you be serious about people not using tools such as Twitter?

Me: I didn’t say there isn’t a place or need. What I’ve said is, it’s all purely about business and in just how one is using poor metrics, and wasting a lot of time chasing those metrics. Rather, than doing and focusing on where they should. And that is; getting one customer to actually spend money with you where they are satisfied and willing to not only do it again, but rather, will tell one of their friends that they should also.

That’s where the power is – of sharing or tweeting as it’s called is in my book. Not you trying to build followers for the sake of just “you have X amount of followers.” When one is engaged in doing that for the near exclusion of all else that’s what I mean when I talk about “busy work.” Thanks, next question…

Question: It’s been shown with the “right” strategy Twitter can be a more powerful medium than what traditional platforms once offered; and there is proof of this. So to say one should disregard these seems a little arrogant or at the least a little near-sighted, and maybe, just applicable to your own situation. But for many others it might not be the case. Do you want to try as to explain the difference or at least acknowledge that point where you might be wrong?

Me: Great question, and my first answer to your last statement is – No. But let’s not take “my word” for this. Please let me ask you a question for I feel it demonstrates exactly what I’m trying to show. Let me ask, Do you have a Twitter account?
Response: Yes

Me: And how many followers do you have currently?
Response: Over 35,000

Me: Fine. Can we all be in agreement 35K is a considerable amount especially for an individual? And for this purpose let’s use the “individual” criteria regardless if it’s a business or not because that gives it the highest intrinsic value as a number. Can we all agree on this?
(Everyone responds yes in agreement)

Me: Fair enough. So, how long have you been building up that following?
Response: About 3 years.

Me: Fair enough, so correct me if I state anything wrong. What you’re telling me is over the last 3 years or so you’ve used a strategy that as far as you believe it to be, is working correctly. And, as proof of that work and strategy, as evidenced by it, you have 35,000 people to read your thoughts or hear your ideas. Is that correct?
Response: Yes, that’s about right.

Me: Again, fair enough. Now I on the other-hand over the same period of time have also worked by my own strategy which entails not having an account and having zero followers. Yet, at any given time as we stand here today my thoughts, or my articles are sent directly to other Twitter followers in documented provable metrics of nearly 2,000,000 (yes that’s two million) and hundreds of thousands of others in ancillary metrics such as re-tweets and the like to their followers, etc.

Now let me clarify as so no one thinks I’m being coy with those figures using some cumulative example. That’s at any given time pertaining to any given article or news I might make. So I must ask you – whose strategy seems to be bearing more fruit?

And I’m not trying to show you up or make you feel uncomfortable. However, what I am trying to do is make you think about what you’re doing. Maybe what you are doing is absolutely perfect for your situation. I have no clue on that, only you can answer it. However, if it’s just a “numbers” thing, than you have to weigh it against that evidence and think if you’re getting the results you really want or better yet – need. And if not, maybe be open to other possibilities. Thanks, and next question…

Question: You balk at writing for SEO and other things yet how will you be found on the net if the search engines don’t or can’t find you?

Me: Great question. First, even the most astute SEO developers have found all their work over last few years nullified with changes to Google’s new algorithms and updates as to “help make a better search experience” they say. Some businesses that based their business models solely on SEO have found themselves out of business near overnight. And it’s still happening as we speak.

However, it has been by my own experience “search” as we thought it to be just a mere year ago is irrelevant and useless. The results, the listings, the priorities, all of it just don’t make any sense as far as I’m concerned. Again, all I know is what I see on my side. However, I have enough material as well as intellectual property on the web to base that argument on an informed opinion and analysis where I personally can see changes as I’ve grown, and how results are now laughable as my team or myself look at them when we conduct our own fact-finding missions.

Let me share the latest revelation I had that I believe will help illustrate what I’m trying to convey.

For the last few years as I’ve stated I didn’t involve myself in the whole SM thing. However, the one thing I have done is share all my articles in a Google plus account I had. My thoughts were, I have some Gmail™ accounts I use and it probably wouldn’t hurt to at the least re-post my articles there where it might help with search. I never followed or shared with + as people use it. I just re-posted them there in a “can’t hurt” attitude.

As many of you know as well as you probably do yourself there are things you can do such as set up “alerts” where if your name comes up on the web you’ll be alerted too it. Again, I just like many of you have thought and maybe still do, this is/was a great feature. So I’ve been using it ever since and now it’s going on many years.

What I now can state as far as my experience is that it has become absolutely worthless. Here’s just one example to illustrate.

Both my name, whether it be in a byline from an article I’ve written, or quoted by others on major media sites (such as papers of record) where their readership is in the millions so it’s not as if they wouldn’t be or are not scoured by the search engines. The results in my alerts? Squat, as in zip, zero, nada.

As my reach has grown to where I literally at times am in front of an audience of millions with gusts to 10’s of, at any given time around the globe where I’m referenced by my actual name (and yes spelled correctly) I receive absolutely nothing in way of my name being out there.

Even now when we do our own “search” and look for corresponding results in a query as to try to give an accurate measure as to see where or when. Just over the last year this has changed so much with its responding results; they are not only frustrating – they are by even more accounts downright laughable.

Here’s just one of the latest in a long streak that caused me to rethink a lot of what I’m doing as it pertains to the “web” or “Search” in general.

I was quoted in a major publication. This time it was the Wall Street Journal’s Market Watch™ which is far from some outlier news site. And once again nothing. And that’s not counting the 5 other top sites that also carried me in varying ways to an easily quantifiable audience of about 30 million.

Like I said, it’s not like I was asking to be “alerted” if I was found on someone’s personal blog. These are major media sites with worldwide followings. But this isn’t out of the norm…this is, and has been – the norm.

Over the last few years I have been probably alerted less than a handful of times. And here’s the kicker, of those times, it’s been to things on my own blog! Things which by their own policies or dictates will tell you are not supposedly counted. For if you follow their policies or dictates this is not supposed to happen (and I do by the way) as to make sure they don’t “ding” you. And yet – there it is. Like I said earlier you can’t make this stuff up, but what’s worse is that’s it’s so laughable it really isn’t funny any longer. It now borders pathetic. But that’s just me.

Not that long ago I would be alerted even if I only showed up on someones blog. An example of this in my earlier days I used the example of showing up on a coffeehouse blog in Salt Lake City as to demonstrate I never knew where my thoughts might end up next. Now I can be quoted, or carried by name in some of the largest media sites across the globe and….pffffffft!

So I know this is a long about answer and has gone a long way, but I think it’s important to illustrate as I try to answer your question clearly. In today’s day and age the way I think about search and all the rest is, the very way I think about my home, phone, or email address.

It must be on the web just like your home must be on a listed city street not in the middle of the woods, and your contact information must be plain, readable, and precise so that people when they leave can send a letter, or call you and it will reach you. Just like if you moved to another city you could tell people where you are and how to find you. Just like we thought years ago about being in the telephone books.

You need to focus your attention that people looking specifically for you – can find you. For find you they will. And the way in which they’ll do that you can’t even begin as to try to game play every option. There are far too many. But if you make it so they can. i.e., Have the actual location properly marked with signage, a clear address, contact info, etc. Whether it be physical or web-based is the most important thing bar anything else.

If you have just those things alone not only will you be found, but you’ll have a more accurate profile on the web than I would garner to say more than half of what’s currently out there. Most sites are down right pitiful. Even those that are supposed to be “open for business” sites.

Then as you grow via your own efforts and word of mouth being spread with other happy customers: expanding that is easy.

But far too many are focused arse backwards. They’re trying to set up for “the millions” when they don’t even have one satisfied customer first. And that’s all I’m trying to relate as far as this topic is concerned. I hope that helps shed some light and with that I have time for one more.

Question: So one must assume that with all your saying or implying the traffic at your own site must be rather large. Can you tell us how much traffic your own site receives?

Me: First let’s get the “assume” or “imply” thing right off the table for it get’s in the way. For numbers mean different things to different people and confuse issues rather than give clarity in some example.

So for the base of this answer let me use this number because it demonstrates what I’m saying more clearly and this way I can’t be said to be “conflating” or “inflating” numbers where the point is lost. So with that said…Let’s say the total traffic to my own site is 1, and I mean that, just one solitary person in a year.

Now you might be aghast at such a thing, especially if I followed up with, “And that’s perfectly fine with me.” And the reason I would be fine and you might be stupefied is for this underlying reason.

The one person that may come to my site might do well over $35,000.00 in a solitary business transaction as in to hire me speak. That’s what I’m concerned with. Getting that one, than another, than another, so on and so forth.

Far too many are worried about getting to 35,000 followers, or “hits” on their site and do absolutely ZERO business in the form of transactions. i.e., Legal tender that will be accepted as deposit by their bank.

That illustrates what I believe is the core fundamental business difference I take that nearly too a person doesn’t. I’m in business – they’re in the vanity business while calling it something else. It may be something else, but what it ain’t – is business.

You can do either/or and there is absolutely nothing wrong with either. But you can’t fool yourself thinking one is something that it’s not.

You must determine first what you are. i.e., a business – or a hobby because both have fundamental differences.

Then once you do that you’ll inherently do the things necessary to advance one or the other and eschew anything that’s not pointedly applicable for the advancement of either. For again. There’s business, and then there’s a hobby.

Many have hobbies they believe are a business, and there are just as many businesses treated as a hobby. This is where most confusion on strategy and tactics not only frustrate people, they can cause real distress in both family life as well as your health.

Just the realization in “the knowing” which one you are, sometimes clears 90% of the things out-of-the-way near  instantaneously you were frustrated with earlier. Don’t let that seemingly small point get lost on you. It sometimes is something that small that makes way for all the big changes you want to happen going forward.

Thanks for some great questions, and thanks for being here!

© 2014 Mark St.Cyr

Are You Advertising Your Irrelevance?

When we advertise whether we do it on our own or we pay for a big firm to get us into large media buys, one thing must be certain: You convey a message that can’t be taken any other way than what you intend.

Here’s an example: You wouldn’t pay big bucks for an ad buy for your big-ticket item where the goal was to demonstrate speed yet, within that very commercial one could clearly see a competitor’s product in the background going even faster.

Something like this getting by the agency or the approval committee would warrant heads to roll. Yet, in effect – the very same set up not only gets buy accidentally, but worse, one can tell where such glaring flaws had to have been signed off on.

Here are two examples that have been rolling on my television screen for a while now and every time I see them I just cringe thinking,”Who is the brainiac who thought this was ready for prime time?”

One is local the other is a world brand which proves this happens across all businesses. No one is immune. Only you can help in making sure it doesn’t happen too you. For nothing hurts more, or leaves a scar more visible, than that self-inflicted moment of “Oh man, how did I let that happen!”

The local ad: We have an ad running for a local eye doctor that for all intents and purposes helps people with a specialty in eye wear: as in glasses. The ad goes on about their selection of frames, their attention to detail in the fit and finish. Then the ad ends with a supposedly satisfied happy customer. However, the happy customer (an attractive young lady) in an isolated shot looks into the camera and states: (I’m paraphrasing) “When I chose my glasses I went only to one place (location here) and even though I’m wearing contact lenses now, when it came to my glasses I was very satisfied.”

If you just went “huh?” and re-read that line. Yep, that’s correct. In an advertisement as “the place to go” to get your glasses. The satisfied customer is so satisfied she’s not wearing any glasses. Even though the commercial is about selling glasses. You can’t make this stuff up. And remember – someone (and that someone has to be the owner of this establishment) believed (or was talked into) this was a great idea.

The national ad: You have probably seen this one however I wonder how many of you have noticed what I just can’t get my head around that no one at both the company, as well as the agency, was making the case just how irrelevant they are. The commercial is for Buick™.

The catch phrase or line is, “That’s not a Buick!” or, “I’m in the Buick.” Where? “Right here in front of you!” Where?

Here’s the punchline as I see it: No one in the commercial can believe, recognize, or find the Buick when right there on the grill is the emblem logo prominently displayed on the front of the car that in some ways is so big, well – It’s the size of a Buick!

Yet no one knows what it is or stands for because even though it’s right there in front of them – they can’t find or recognize the car, nor the brand itself. Again, you can’t make this stuff up.

Advertising can be a very expensive proposition. But what can turn expensive into costly is when it does the exact opposite of what was intended. And if you’re paying the freight, it’s your job to ensure that the ROI of an ad buy – doesn’t cost you in places you never intended.

© 2014 Mark St.Cyr

F.T.W.S.I.J.D.G.I.G.T.

(For those who say I just don’t get it…Get this!)

Nothing brings on the chance for people to point fingers, or sing like schoolchildren the old, “Nah, nah, na, nah nahhhh!” when you’re in the public eye faster than saying one thing – and having the opposite happen.

I can not begin to count just how many people I know, (let alone only vaguely familiar with) that are looking at the financial markets today as they rocket higher wanting me to explain myself. My initial response almost to a person was, “What do you mean me? Ask your financial adviser!” That’s when I could see (if not feel through an email) the absolute frustration many are having.

All kidding aside, it is with good reason they’re upset. In actuality many are coming around to an all too frightening idea that many of the people they’ve listened to (or been advised by) as well as the explanations they have relied on as “fact” is dissolving right before their eyes. They are beginning to see for themselves 1+1 is not adding up to what they’ve been told.

They knew it should be 2, but have allowed themselves to be lulled into it equaling “whatever” as long as that “whatever” was more than it was before. The “whatever” was then OK. But now? Not so much. And they can’t make heads or tails of it. (if you yourself fall into this category please continue reading. I’ll try to make it worth your while.)

As I write this the financial markets are once again on an absolute tear higher. Since my original post this weekend we have recovered nearly 2/3rds of all the losses over the last few weeks it less than a few days. Today alone is setting up for a 2% gain in the S&P 500™. What could be better right?

Well to start, what could be better is – if this gain was what you, or I, have believed over the years of being in business, Good earnings = higher markets. Or better yet, Great earnings = even higher markets.

So then why when some of the largest names in these very indexes report terrible earnings, and their stock prices have in effect what I described and said to watch for i.e., “trap door” like events, does the markets rise?

Easy. As I’ve said till I’m near blue in the face: “It’s all about the Federal Reserve and their interventionist policies. Not business as you or I once understood it.”

McDonald’s™, Coca-Cola™, IBM™, just to name a few tumbled in outright “trapdoor like” fashion as they reported their earning. And Netflix™? The once darling of Wall St. (and I still believe there are more to mirror this fate) seems to have been thrown under the bus, let alone left at the curb.

But what changed “bad” to “Let the good times roll?” Well to start, as I alluded previously it’s all about the Central Banks. And not just our Fed.

The initial “ignition moment” was done on Friday and then another Fed. official piled on Monday agreeing and jawboning the chorus theme of maybe QE (quantitative easing) should be extended.

Then as some of that momentum fell by the wayside Monday evening none other than ECB (European Central Bank) was reportedly getting into the game in a more dramatic fashion.

Again, what’s not to love right? Obviously the meme is intact “The Fed.’s got your back!” Great! But what does that mean for all you know about business if that’s all it is now?

For if that’s what the financial markets are currently, that is, nothing more than what a Mario Draghi, or Janet Yellen, or other official decides. If you lose money or even make money, is it now “their” fault or prowess? Because it’s impossible to be anything else. For it’s now evidenced prima facie by the very timing and movements within the markets they only respond to one thing: Not business, not indicators, not earnings, not unemployment, not housing, not ____________(fill in the blank) but the only indicator that now matters – what a Central Banker says, or doesn’t say. Period.

I just saved you about $250,000.00 and 6 years of your life in that one statement. You can now go work on Wall Street and compete with all the current MBA’s holders for you now know – all you need to know about Wall Street and the markets. Welcome to the “new normal.”

Not only that, you may just as much know more than the poor saps that are just finding this out, while just receiving their first student loan book. Harsh? Yes. Based in truth and fact? Absolutely, as far as I’m concerned.

Add onto this the fact that all day the markets have done nothing but experience major issues dealing with “breaking markets, ” “stock halts and trading halts” in the very largest of trading names. Apple™ shares itself were un-tradable due to “issues.” The list is absolutely staggering. The markets are acting as if they are suddenly switched over to vacuum tubes let alone the “‘efficient” markets they’re touted as.

For what it’s worth, I’m going to post a few headlines you won’t see elsewhere but for ZeroHedge™. They’ve been following the markets today and listing these issues at a break-neck pace, and they deserve Kudo’s. I’m not a “link type guy” however the amount of information along with the analysis should be required reading for any and all whether they be a seasoned, or a budding entrepreneur. As well as any businessperson from the global conglomerate CEO, to the solo practitioner.

Having a working understanding of the financial markets is not something to be looked upon as “work for others.” It is a must for any serious business person. For we all, one way or another, are directly correlated, as well as connected too it. Period.

To wit: Just today on ZeroHedge. Some headlines and links.

VIX Has Never Done This Before… Ever

What Rout? Stocks Have Best Day In A Year

The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash

 NYSE Gives Up Trying To Fix Itself

There are more however those show best exactly what is going on within these markets. You needn’t be a financial market maven to understand what is implied. You just have to be a businessperson. And if you are, just these 4 should make one’s blood run cold.

As for me many of you know I’m not a financial adviser, nor have I ever worked on Wall St. I don’t pretend to know anything more than anyone else. I’m just a business man and I know from hands on experience unicorns and rainbows have their place: in children’s books.

However, when someone wants to try and explain to me that balancing the books of a business is similar to reading a children’s novel I’ll have none of it, and I’m not bashful about calling it out either.

There is a place and a time for fairy-tales. However – there is NO place for such within the most important financial markets in the world.

Saying different isn’t storybook thinking – that’s just plain ole lunacy that even Alice would find disturbing.

© 2014 Mark St.Cyr

When Confidence Crumbles

Once again we awake to an array of seemingly contradictory news and reports across the spectrum. Whether it be Ebola, the financial markets, or just plain ordinary life in general. It seems everything is once again in turmoil.

The issue at hand is migrating from worrisome to darn right alarming. And that’s not counting the general public at large. That speaks directly to the very one’s trying to re-establish confidence.

Today, what was once presumed as “a troubling situation in competent hands.” Now appears more inline with the space between “in” and “competent” being a typo.

The confidence in the people who are supposedly, as well as supposed to be “in charge” is doing more than just dwindling. It’s crumbling in Humpty Dumpty like fashion. For no matter how they try – it too may never go back together.

Once confidence wanes, or is lost, regaining it can be just as monumental of a task than the actual crisis itself. In particular it’s in the manner of reflexive or reactive assumptions that are communicated, along with conflicting assertions made by the very people trying to instil it – that diminish it. For it too can not only feed upon itself as not helping in real-time, but rather, hurting any and all credibility moving forward.

Sometimes no amount of “rights” will affect the one impression held by the public which you made wrong. Once it’s lost sometimes no amount of words seems to help. In fact, more words can actually make matters even worse. Sometimes – much worse.

This in turn is the exact tipping point where politicians, academics, et al find themselves not only up against a rock and a hard place, but also looking down the hillside where torches and pitchforks are advancing up the once presumed impassable slippery slopes.

The more they try to calm the public with words or speeches, the less anyone listens. For they believe they knew (as well as still know) all they needed earlier. And all of that has been shattered.

In other words: All that was told to them prior acts as the very foil as to not believe anything else. Regardless be it the truth – or not.

A great example of this paradigm can be found in Taleb’s book, The Black Swan:

“When you develop your opinions on the basis of weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions, even if this new information is obviously more accurate.” -Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (2007-Random House)

Here is where things get unusually uncomfortable for both those in the positions of leadership, as well as those that are supposed to follow their guidance. For when it’s shown what you’ve told proves out to have been nothing more than an exercise in how well one can spin the specious? They wont believe you – even when you speak the truth. And there in lies the explicit danger.

Nothing in recent memory is showing just how precariously close we are in an outright confidence crisis than the memes being unraveled in dramatic fashion today.

One need look no further than the financial markets to get a dose of reality where the contagion of both Ebola as well as The Federal Reserves omnipotence is disrobing for all to see. And the picture isn’t pretty.

Suddenly what many would describe as “out of nowhere” the markets fell wiping out a years worth of gains (and for some individual stocks far more) in a matter of weeks. And for others – just days.

Then with what mirrored this “out of nowhere” interpretation; the markets bounced and rallied. But (and its a very big but) rallied to where? Higher? As in back to new all time never before seen in the history of mankind new highs as had been the case every other time? Nope.

It would seem the “Fed’s got your back” meme now means – only so far. Because what was demonstrated by anyone that cared to truly look was it was nothing more than jaw-boning for effect. And how long its effect lasts is truly up for grabs. Maybe months, maybe weeks, maybe hours, and maybe – it’s already over.

The only thing that stopped the markets from what many could see as the precipice of an outright calamity was the revelation from St. Louis Federal Reserve Bank President James Bullard with a comment where he interjected his view, (I’m paraphrasing) “The Fed. should consider delaying the end of its QE program to halt a decline in inflation expectations.”

Suddenly the markets in a headline reading, algo fueled, HFT tsunami released wave after wave of stop running buy orders sending stocks rocketing higher in such a dramatic fashion it was touted as one of “Wall Street’s best days in years.”

All because of a great economic report? A great earnings report? A great _________ ?(fill in any economic indicator you like here) Once again sorry, but no.

It was all initiated because someone at the Fed. posited in public that maybe QE should continue. All I can say to that is welcome to your new “economic indicator.”

However this indicator says more about the reality of the markets today than the picture of confidence and stability they keep trying to convey. What’s at issue is; this won’t work when it’s no longer believed by the algos, let alone anyone else.

Truth is the machines can and will be fooled – but only for so long. For it doesn’t take a programmer to realize words from a non-voting member means little more than the cause or effect of a one day headline. For unless Ms. Yellen says it – it’s now yesterdays news. Regardless of how newsworthy or market moving it seemed at the time.

We’re watching this play out and how it may portend to events coming here in the coming days with another once reliable headline market moving wordsmith, ECB president Mario Draghi.

Mr. Draghi’s market moving line of “whatever it takes” seems now to be taken by the markets in the vernacular – “What-e-ver.” For the markets in Europe are also showing signs of great unease. (Personally if I hear that supermodel Gisele wants to be paid in anything but euros? All bets are off!)

Now there are a great many people both here as well as abroad suddenly paying attention and watching their money vanish in a fashion unseen since that which shall not be named. i.e., The financial crisis of 2008.

Today many of the so-called “smart crowd” are finding themselves once again in the all too distant past of near forgotten question and answer debates with clients reminiscent of that period.

Customers will sit with expressionless faces as they wait through the never-ending platitudes of, “Invest for the long haul; This is a buying opportunity; If you loved them at the highs you should love them even more now; Stocks are on sale!” etc., etc.  Only to then hear that dreaded response that chills their blood faster than a margin call on Monday: “Sounds great…Can I have my money now?!”

I would bet dollars to doughnuts a vast majority aren’t going to take the chance let alone have the confidence as to just let their “money ride” once again. Regardless of how much “confidence” one wants to shout into the camera on a trading room floor.

Just as previous outflows show – nothing will change their minds. Many never came back to begin with, while those that still remain will themselves be looking for the exits.

And that alone poses extreme difficulties for the market as a whole in the coming weeks and months; let alone years.

Add on top of this? The never-ceasing contradictions availing themselves daily when it comes to Ebola.

It has gone from “Don’t worry, we got this!” to “Who’s got it and where?” to now “What do you mean I might get it?!!!” The confidence around this whole containment facade has crumbled so fast it’s a wonder it stood at all.

In less than a week we have gone from contained to now verified reports the actual agency responsible for that assurance of containment not only dropped the ball, but actually gave reassurance to first responders in direct contact with the first ever documented patient with Ebola on U.S. soil permission to travel via commercial air.

As much as the moniker “you just can’t make this stuff up” fits, add too this the surreal news where another of these individuals (one that actually handled samples) is now traveling aboard none other than – a cruise ship!

Officials have been falling all over themselves and answering questions with such contortion twisting phrases it would make a carnival worker blush. (that irony is not lost on me)

It is also absolutely ironic and jaw dropping that the very officials in charge of containing the spread of such a deadly disease who have stated over, and over, and over again that “banning travel or entry onto U.S. soil is not helpful in helping containment” is finding that every country they ask for permission to use their air, ground, port, whatever flat-out says: No!

Can one imagine what it must be like for the well over 1000 passengers and crew aboard that ship now put back out to sea knowing full well they were not only forbidden from disembarking for fear of contagion, but rather they now have to turn around and sail back aboard that very ship along with the possibly infected passenger!

What happens to all those people once they return? And how is this ship’s arrival going to be portrayed in all the media upon that arrival?

This will shatter people’s perception of confidence if the television news follows that white cruise ship into port in any way reminiscent of the way they followed the white Ford™ Bronco down the freeway.

How does one think this looks to all those that believed (or at the very least fooled themselves into believing) “The way to ensure containment is by not isolating us from it. That’s why we need not restrict air travel or anything else that could help inoculate us from spreading it within our own population.”

Just when you think it can’t get more Keystone Cops-like we wake to just the latest version of “are you kidding me?”

In a show of what was touted as “helping to instil confidence” it was announced the President via an executive action created the position of an Ebola Czar naming Ron Klain to that position.

Forget the left-right politics of this. That’s not what I’m talking about. What is glaringly, mind-boggling, absolutely surreal about this appointment is in the fact that by all accounts and reports he has no medical, healthcare background.

What is also being reported is that he was picked because in effect – he’s nothing more than a political insider. But rest assured he can get things done because: he knows how Washington works. Again “are you kidding me?”

In my opinion what’s needed right now if there was any chance for building on any remaining credibility or confidence would to have at the very least chosen someone channeling both the demeanor as well as the military uniform with all the accoutrements of former U.S. Surgeon General C. Everett Koop.

Why this position wasn’t demanded to be filled first before a calling for anything or anyone else has not been lost on a great many.

As bad as this blunder is in the ever-growing list of missteps, I believe there is one that shakes any last remaining confidence right into the abyss.

For one doesn’t need to know anything more than when a press conference is called by the President as to make an available photo-op session for the press to use as to help quell any and all questions or concerns. The one thing you do as your first duty as the newly appointed “Czar” is to show up!

For the picture of the President there alone without him regardless of the room being filled with others speaks more than the words conveyed by the picture itself – It screams volumes so loud one can’t ignore them.

You can be confident in that.

© 2014 Mark St.Cyr

Profiting At The Bottom Line™

This month’s focus: Stabilizing Turbulent Business Cycles

There are times when a business might think hunkering down during a raging business upheaval or uncertain business climate is prudent. That may be true in certain circumstances however, what I would argue is; this is exactly the time to also be proactive in helping current customers as well as potential in a more educational process rather than just the selling version.

Case Study: During the late 1980’s the banking crisis now known as “The Savings and Loan” crisis hit. It changed the business landscape so quick, so fast, that at times it was hard to keep one’s head about you let alone trying to make plans.

Everyone was nervous from the large-sized right down to the solo business owner. Banks were changing credit terms on the fly. Companies that were funded for daily operations via their accounts receivable found one day what was accepted and know became unacceptable and mysterious.

A figurative example would be: You had working capital loaned on 30 days of your receivables to suddenly be notified now it was only on 21 – then the next month 14 – then maybe only weeks later 7. It was absolute chaos for anyone in business let alone businesses such as the food and restaurant that lived and died via credit terms.

Outright fear from uncertainty was held by many, and with good reason. The next call or letter from your bank could mean when you hung up the phone – you hung up a “Closed” sign. Yet there were those that came out even better on the other side.

The one’s that not only stabilized but actually gained market share were those that cut through all the nonsensical aspects of trying to close sales and began working from a standpoint of offering expertise, or valuable resourceful knowledge that both customers as well as employees could make use of.

Many of us took on the demeanor of “information conduits.” We began by qualifying as well as quantifying the staggering amounts of useful and purging the useless information that we could get our hands on. Then I/we relayed openly and honestly what we believed we knew – and what we knew we didn’t.

I had prospective customers that previously wouldn’t take my calls – call me looking for information because of a referral from my actual clients telling them “they could trust what I was saying.”

Once the dust settled it was clear: The one’s that truly offered to be of service to any and all that were looking in an honest, open, and fair manner reaped the business left behind by those either too scared to say a word, or talked too much about “how scary” it was.

When things are tough – that’s when opportunity strikes. When it’s easy – anyone and everyone is doing it. But during turbulent times most either don’t (or wont) get in the batters box.  Or worse, they look for walks when they should be looking to read the stitches – and swinging when appropriate.

© 2014 Mark St.Cyr

Profiting At The Bottom Line™ is a monthly memo, which is pithy, powerful, and to the point. It focuses on innovative techniques and or ideas that you can put to work immediately in your daily or business life.

When Nothing Matters – Until It Does

It would seem to anyone that’s been in business before the financial crisis of 2008 not only had the rules changed, but rather they changed so much even Alice would find our current looking-glass far more surreal.

It also seems that it wasn’t all that long ago where one thought that maybe, just maybe, to understand the craziness around you; you needed to ever so grudgingly accept the nonsensical mindset of “bad is now considered good.”

So, you adjusted your investing theses, your business plans, your whatever as to try to navigate these  uncharted waters. Waters that emanated via the Federal Reserve opening (if not destroying) the dam and flooding the financial markets with liquidity so deep even Montana thought it had a new water view. To then suddenly all you bought into (literally) all you’ve been told. All of it – falls like the house of cards you tried to will (wish) away as if it weren’t true.

And there in lies the true crux of today. For a great many will rue the day when they bought into: “Pigs can fly,” “The markets are at these levels based on sound fundamentals,” “The Fed’s got their back,” and “Ebola is contained.”

It is astounding just how far behind the curve many are finding themselves. Suddenly, almost to a person I meet is either doe eyed, or worse, portraying signs of a deer stuck in the headlights.

Just look at these two headlines only weeks apart to give one clues as to why many they now meet appear in fact clueless:
Aug. 21st, “S&P 500 Tops Record, Nears 2,000 Amid Confidence in Fed”
Followed by:
Oct. 9th, “Top Investors See More Pain as 10% Losses Spread; S&P 500 ‘Painting a False Picture'”

Just these two latest examples put on display why one needed to be able to think clearly and not buy into the false narrative. Again, the problem is a great many are now finding their prior believing in that narrative is becoming clearer and more problematic because – they were not (or refused) thinking to begin with.

This is where everything is changing because the great masses whom many relate to as “the herd mentality” is now showing signs of great nervousness. And once this group gets spooked: It’s Katie bar the door time.

The issue that compounds this problem is what many  more are realizing and never thought possible: The very real possibility of a pandemic that can actually affect them. Not just someone on the other side of a screen (or phone). But actually – them.

Again, this is where everything that seemingly didn’t matter, or was brushed off as “never gonna happen” suddenly turns into “Wait…what?” And there are many “Wait…what?” moments compounding one on top of each other.

In less than a few weeks the markets have negated all of the gains (and then some) for 2014 as we stand today. Are 5 – 7- 10% corrections out of the blue a normal thing? Of course they are. However, what makes this one different from the others? Easy – just look at the timing.

How is it that a market corrects in a dizzying fashion when all of the “fundamentals, fairly priced, economy improving,” etc., etc. are in place as everyone’s been told ad nauseam? Unless – it was a mirage.

And what makes a mirage a glaring reality is this: The very month quantitative easing ends – so to does an ever-rising relentless “bull” market with a sell off reminiscent of earlier crises exposing for all to see prima facie the house of cards it truly is.

Again: If these markets were based on fundamentals why the need for any concern? For concern there suddenly is.

On top of this comes the compounding effect where what was once seen as improbable begins morphing to not only plausible – but probable. Fear of an actual outbreak or pandemic. e.g. Ebola.

As we stand here today many are waking to differing headlines breaking out across the web and wondering: “But how? I thought, or, we were told….”  And just like the above example with the markets – this also is where everything changes.

While the issue of “why or how” can be understood quite easily, it’s the compounding effect on one’s psyche as they look at both their financial well-being as well as their health and they cross once presumed separate paths. Where what they’ve been told no longer is in the abstract, but is both tangible, and all too real i.e., A 401K balance that suddenly is cut, along with headlines, “Dallas Hospital Worker Tests Positive For Ebola In First Person-To-Person Transmission On US Soil”

Now we have a confirmed Ebola case transmission between a care taker and patient that was not by casual contact, but rather to someone who was encapsulated “wearing full protective gear.” Along with a correction in the financial markets negating all the years gains where everyone was told “it’s a great time to be in the markets!” All in less than about a week.

For the one’s lovingly refereed to as “the herd mentality” this changes everything regardless of how the main stream media will try to push a differing narrative.

And that’s if they want to push a “don’t worry calm down” story line. For we all know “blood in the streets” sells, and what the media needs more today than yesterday is anything that sells. So I wouldn’t look for anymore rainbow and unicorn puff pieces on the markets or health concerns anytime soon.

As a matter of fact I won’t be surprised if the drumbeat of panic not only intensifies – but gets turned up to 11 by this very same band of cohorts that just weeks ago were touting: “Everything is beautiful man!”

When I first began to raise serious concerns on Ebola on just how and why the dangers that could manifest within an economy such as ours. Some regarded my thoughts as “throwing gasoline on a contained fire.”

At the time it was a fair criticism (although I stand by my article and thoughts) because many just can’t get their heads around what they themselves see as “unlikely.” Until it is shown not only as possible – but probable. To wit:

“Public Health Emergency Declared In Connecticut Over Ebola: Civil Rights Suspended Indefinitely”

That’s not hyperbole, nor is it not something as a “well that’s what they say but will never happen.” No, that’s now law, backed up with the enforcement of by any, and all means at the disposal of a government body. Period.

Suddenly everything I outlined in my last article as possibilities to ponder, or at the least; a business owners (regardless of size) need to think, understand, and be proactive as to deal with possible disruption scenarios has moved from some meaningless exercise to be done in the abstract – to the very possibility they could be realized at any given time. Regardless of geography.

An example of what I was trying to convey within this construct is this: What most don’t understand is that many of the very people who an advanced economy rely on for keeping an infrastructure running require mobility. i.e., The crisis team that fixes large-scale power outages, maintains water treatment facilities, ____________ (fill in the blank) travel from job to job. They are very specialized and usually run in teams.

What happens if an embarked team to repair a water treatment facility that is shut down due to unresolvable circumstances (for lack of critical expertise) is aboard a plane that has a similar episode as the one in Philadelphia; where a passenger prompted an entourage of hazmat suited personnel?

What if that happened in Connecticut today? And it just so happened the very people needed to repair that scenario of a water treatment facility are also aboard? Now what once seemed improbable becomes very real and a whole lot more plausible. Along with its disruption and impact to a great many more hundreds if not a thousand miles away.

Do you now still send teams or people in groups? Or do you split them up? Do you fly them on different planes? Do you fly them at all? Do you now send some via air while others go via ground transportation? Where do they stay? All at the same hotel? What does this do to once accepted costs? Can you charge accordingly? Can they pay?

All these questions are very real, and the list goes on, and on. And not just for this skill set, but for a myriad of others across an advanced economy.

As one can clearly see. It not only changes the lens of how one has to view this economy, but rather, it might be prudent to look through a whole new set of glasses.

And none of them had better be rose-colored.

© 2014 Mark St.Cyr

Welcome To A “New” New Normal Earnings Season

It’s not supposed to be like this. We’ve all been told earnings are great, corporate profits are great, analysts estimates have been rising. As a matter of fact, if one dared to question any of these metrics we were referred to as “idiots.” (And that is an actual quote.)

Today as we enter this earnings cycle we have a new phrase that I’m sure will enter the lexicon of the lay person in reference to stocks, but will send shivers down actual Wall Street’ers as they have to defend, argue, or give a smoke and mirrors story that will have a chance of being believed. That phrase will be “a trap door event.”

Wall Street loves to spout nice little catch phrases when suddenly what they thought (or told) investors should happen suddenly turns around and does something else.

Some classics? The “value trap.” This basically is said when something was a “sure thing” as to go to the moon, and all you had to do is get on the launching pad now as to be along for the ride.

Then? Squat happens. Not only does it not go up, it just sits there. However, the whole time it is burning fuel. (i.e., burning through your balance in some form of fee to sit there.) But not too worry, you’re stuck in “value.” Makes one feel all sort of fuzzy when it’s put that way is it not?

Then there’s the dreaded “Liquidity trap.”

This is where you’ll hear talking head, after talking head tout this line as the reason “you need to be in stocks!”

It used to have a strict definition pertaining to interest rates, savings, and bonds. Now it’s just a mantra to instill fear into anyone sitting on any type of actual cash as to prove they are “missing out on this wonderful bull market.”

What it really means, is that they are missing out on grabbing a fee. And that can not be tolerated. After all, it’s their sole purpose to gain a fee (ahem) I mean: Its their job to make sure “you’re not leaving money on the table.” Yes, that’s it.

Lately it has worked in this “new normal” they have told everyone is upon us. For we were all not as sophisticated to understand that other mantra – “It’s different this time.”

Well, I may not be as sophisticated as those on Wall Street, but I will make this observation. It just may be “different this time.” Only not for those that have been trying to weed through all this smoke and mirrors. Rather, for all those architects that put these houses of cards together in the first place.

Suddenly this other “trap” analogy is showing its hand and it has a great many that pontificate that stocks are “fairly valued” and other such drivel very nervous; for its implications can have a great effect on their own investing future.

For how does one explain a “trap door event” to a client, when they’ve been assured their investment thesis was on solid ground?

Nothing puts this into the correct framing and shines a spotlight brighter for all to see than the latest absolute debacle for stock recommendations from non other than the once touted “genius” of mom and pop investors (or should I use his own “home gamers” moniker) Jim Cramer of CNBC™ fame.

In my opinion, this talking head has done more damage to the individual investor who follows his dissertations or recommendations than almost any other single person.

Why? Easy – For the few that are actually left in these markets with their 401K’s still struggling or trying to understand the ups and downs. Then basically being reassured by nearly every so-called “smart crowd” talking head that the absence of downs is a product of “the new normal.” And those that say it’s not should be shunned.

To suddenly watch their investment go up – down – then out – changes the way you view a thing. Dramatically! Here’s just the latest example.

On Aug. 26th Mr. Cramer (the person who shouts at your screen to: “make sure you do your own homework!” because that’s what he does) was recommending to people why an investment in GT Advanced Technologies Inc. is the place to be. Only weeks later on October 4th it loses not 10%, not 20, 50, or even 70 – but 93% of its value in what? A “trap door event.”

Here’s a chart of what I believe will become a reoccurring theme to many more so-called “Wall Street darlings.” Welcome to the “New” New Normal earnings season.

Chart screenshot Courtesy of Zero Hedge

Chart screenshot Courtesy of Zero Hedge

You can read a breakdown along with the actual clip reported on ZeroHedge™ here. Cramer Does It Again: GTAT -93% Since Aug 26th Recommendation

At issue here is not that it’s just Jim Cramer, he was far from the only one. However, he is basically the single most recognizable figure with his main stream investing books, bells, buzzers and whistles TV show, along with putting on “investing shows” across the country on college campuses.

Along with probably single handily instilling more false confidence in many nervous moms and pops by touting the line “The Fed’s got your back!” more than any other single individual I can fathom to name.

Here’s another just because it brings more light. Here is a quote from Mr. Cramer’s Mad Dash in April:
“Cramer likes Apple but called Samsung a “great company” and stock. However, it may be difficult for U.S. retail investors to get in the name since it trades in the Korean stock market.”

That might be the best news that one might have not been able to “get in” for as of this writing the headline terms being used for Samsung™ earnings? “Implode.”

Not what other analysts want to hear being used either. For it was reported consensus estimate was around $5.2 Billion in profit. That’s quite a bit however when it comes in at $3.8 – that’s a whole lot of “value” no longer there.

As we move deeper into this earnings cycle I expect more “trap door” scenarios in some of the very names we’ve all been told ad nauseum were “fairly priced based on sound metrics and comparatives.”

The whole social media space I believe will be one of these areas hardest hit in the whole “new” new normal earnings period, based solely on the facts that “free money” will no longer be available to throw at this space as it goes away – at the very time it’s probably needed more than ever to keep it propped up.

With the Federal Reserve’s QE policy set to end this month all these “new economy” juggernauts are going to have to prove that giving away the store for “free” as to entice users, customers, and more; will have to prove they have the ability along with the quantifiable hard numbers accompanied by real “cold cash” they can pay those promised returns to Wall Street.

If this proves to be the case the term “trap door” will not be used in reference to some new gaming app available. It will be to describe serious consequences to people who assumed investing in these markets has been nothing more than a game to be played by “players.”

Just watch how fast the “players” in the world of algos and High Frequency Trading can change the meaning of “liquidity trap” when they decide – it’s not in their best interest to play.

It will take on a whole different connotation than anyone on Wall Street has been telling you.

© 2014 Mark St.Cyr

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