This post also appears in Forbes.com…………CEOnetwork (R)
The Dow Jones Industrial Average hit a level that every pundit and analyst on TV wanted to scream for months now…DOW breaks 10,000! All are saying it’s a “milestone” it’s this…it’s that…….It’s Hog Wash in my book. That’s a pretty big statement so I’ll elaborate without getting too technical.
First off, let’s remember…..Television Financial Show ratings go DOWN when the market goes down. That’s not an assumption…that’s a fact. Viewership decreases as people feel worse about the market or are losing money..They just don’t tune in to hear how much money they lost.That’s why you see commentators on Financial Networks putting such a positive spin on everything, and anything. CNBC as this year is down in viewership over 20% to 23% this year. ( I can’t remember the exact # but it is close to what I stated…You can research it yourself to make sure.) Television is like a bakery if you think about it…You always have to have fresh bread in the window…No matter how Bad sales are. So it’s no surprise that the spin would be as if the market was on the “Bull Run” of a life time as it is being portrayed. It’s NOT!
In 1999 when the DOW first broke 10,000..It was a great, and historic event, but it was also done without training wheels. The only reason the market is at these levels currently is from the Trillions….Yes…Trillions of dollars allocated by the Federal Reserve to keep Banks, and other institutions from completely collapsing. Analysts are falling over each other showing how “Earnings” are beating expectations. If anyone cares to notice…..It’s not really beating …It’s just Not as Bad as expected?……..Huh? Or another way to say it might be…We were expecting Famine…but it’s only another year of Drought….OK I feel much better now.
Just a few other caveats to ponder as this “Bull Rally” continues….( I believe it to be on its last leg myself.)so I’ll list a few.
Did anyone on TV as this market kept going higher state that another “historic event happened just month and a half ago…..Goldman Sachs on 1 trading day accounted for…..34% of the TOTAL NYSE trading volume. (Welcome to your new Wall St. the old one doesn’t exist.)..and it’s your Tax dollars….Not Bad for government work I guess.
Did anyone on TV state as this market was going higher that over 44% of 1 trading days total volume was allocated to just 2 stocks? Those would be the governments Fannie and Freddie Mac….Who by the way, were about to be de-listed that week…If their market share didn’t increase by that week’s end. Wow… Good thing they were on sale Ay? That surely was historic..from so many angles.
Are you an older CEO..or a newly appointed CEO….either way…How’s that Climate Bill…and Health Care Bill that’s passed and about to be voted on and become LAW soon making you feel?….Don’t worry…..everyone said either bill would never see the light of day……Oops….Those commentators got it wrong again. Well it’s not like they have to deal with the implications….Right?
One last thing that you wont hear on TV…All this so called “Bull Run” we’re on…Well the total volume on just one of the exchanges…the CME…that’s the place you see on TV most of the time with the Futures Pits were Traders make the markets….So far Volume for the futures is less than 1/2 of what it was just a year ago. So much for everyone jumping back in.
I heard Steve Forbes say it clearly when asked on one of those Financial Shows..( I’m paraphrasing but not by much.)…. Until the Fed gets out…The markets are broken.
Just a correction…I made a mistake…the 44% also had 2 other stocks……Citi..and AIG…I just wanted to make sure when I was pointing out the government involvement…I wouldn’t be accused of doing government quality reporting.