I was left slack-jawed as I listened to an interview on financial media between the host and guest. I have always enjoyed as well as respected the host even though many times I may totally disagree. However, as for the guest being interviewed, not only did I disagree: I lost quite a bit of respect for.
During the interview the questions were posed as to why people (investors et al) harbor these feelings of angst as to whether or not they should get in, get out, etc,, etc. The guest then went on to use data points, math, trend references, and any other metric available within a snake oil sales bag as to prove his point: Where people not believing in this market rally along with those who’ve not participated are, (and I quote) “Idiots.”
I have only one answer to that statement: What you’ve just demonstrated is exactly why people with more than half a brain aren’t buying your message: You are insulting their/our intelligence.
Over and over again data samples were used as to fortify the argument why it is not only perfectly logical to be at heights never before seen in the history of the financial markets, but we’re here based on the sound argument of earnings and profits. (right here I nearly lost my coffee!)
So good are these earnings it was noted, “The analysts had to revise their numbers up!” This was stated as ipso facto the financial markets are ready to power on even higher.
I’m sorry, but I’m a businessman, not a “Wall Street-er.” And I know first hand: Data points, trend-lines, projections, extrapolations, and more can be made to look and sound more in line with watching a fairytale presentation about unicorns and rainbows. Add to this from actual experience and knowledge most don’t (or wont) stand up to the first truly hard reality based objective analysis poked anywhere deeper than superficial presentations and analysis.
When asked to define who constitutes the “Idiots,” the reply came back (I’m paraphrasing but not by much if at all) “The people who are giving into their worst human instincts allowing their emotions to control their perspectives and attitudes their comments and their portfolio are ignoring the data.”
No, we are not ignoring the data. We understand the what, where, and how the data that you are providing as proof positive is being created and cherry picked.
What’s glaringly obvious to anyone with any common sense is that all the data as to back up the position by the so-called “smart crowd” that it isn’t the Federal Reserve’s intervention moving this market willfully omits: None of their historic data contains the Fed., its direct intervention of balance sheet purchasing within the markets of today! I mean seriously – we’re the “idiots?”
What’s being completely ignored via the data is that you believe we are idiots for knowing the difference. It would seem we as investors, business people, entrepreneurs, mom or pops are looked upon as just not being able to understand fairy tales and fables. The issue for Wall Street is many of us are a lot smarter than they give us credit for.
I know it’s only in a Wall Street brokers office where I’ll be shown reason after reason why I should invest my money in their newest (ridiculous) scheme. For again, only on Wall Street can the case be made (with a straight face): “This company is now selling dollar bills at 99 cents. However, with improved efficiencies, synergies, a workforce downsizing and more: they’ll be able to offer even more of a discount creating even more top line growth. Currently using GAAP accounting, sure they’re running at a loss, but via their new accounting firm and restructuring their Non-GAAP earning shows them making money hand over fist next quarter! This company is destined to be the hottest thing since ________(add last greatest bankruptcy here) Just look at this chart! But you need to take the long-term approach here, you need to ride the waves, so don’t look to pull out at the first sign of trouble, as a matter of fact: that’s when you should buy more!” And I’m the one who’s an idiot?
Getting back to why we’re crazy for not buying in (especially at the highest level the markets have ever been in the history of mankind) to this financially engineered market can be precisely correlated to the very people who are in charge of it!
Speeches and more pointing to “over confidence” have been coming straight from some of the very people who are themselves Federal Reserve Bankers. (You know, the very people in charge of providing all this juice!)
Many are both publicly stating or eluding too in no uncertain terms that it is the very people telling others such as myself we’re “idiots” that are acting, talking, suggesting, and making recommendations with total abandonment and self-directed obliviousness to the potential dangers within the markets themselves.
Let’s just highlight for example why people like myself who the so-called “smart crowd” refer to as “idiots” won’t invest in the markets as they currently are.
First: Any (and I mean any) so-called “financial expert” that can sit there with a straight face and use metrics from one time period while glossing over the glaringly obvious that most of those very same metrics have been completely adulterated, and are representative in name only of what they first reported.
If an “expert” wants to defend how today’s unemployment headline number is comparable in representation for what it was in all the charting periods they want to hang their hats on as proof positive employment is getting healthy – I have some ocean front property in Kentucky I would love to sell you. Or, better yet – for you to “invest” in.
Next: If the markets at present heights are representative of a “healthy” economy and not a product of the Fed.’s intervention (Aren’t financial markets supposedly a form and representative of economic health?): Then why in the world can’t the Federal Reserve not only end all the forms of QE currently in the markets, but end them early? (Oh the humanity!!!)
Why can’t the Fed. right now announce it is stopping all its programs, give dates as to when so the market knows, begin immediately to reduce its balance sheet, and raise interest rates say by some staggering amount of let’s say 1/2 of 1%? That would bring us up to (wait for it….) 1%!
Everyone knows the reason why: It can’t or the markets would freak out – and everyone on Wall Street knows it.
It’s in that statement above where the crux of all us “idiots” issues lie with the so-called “smart crowd.” If it can’t be done, that alone proves ipso facto that all the facts, figures, trend lines, charts, sentiment, blah, blah, blah that are thrown at us to muddy true objective analysis are worthless. Period.
We have never had this type of interventionist monetary policy actively participating within the capital markets. So much so that again I’ll state: Some of the very people responsible for it (at the Federal Reserve itself) are calling for the manning and lighting of the signal fires for caution.
There is nothing wrong with someone turning from a bearish posture to a bullish posture as far as market positioning for the reasons that: They’ve been wrong – for all the right reasons.
There are those times where educated and savvy investors and individuals can and will put money to work where they need to hold their nose. The difference is: if it all blows up, we’re adults, we understand, we knew the risks and can live with the consequences. We might not agree on everything, but it’s a pragmatic use of both money and investment guidance that’s truthful. e.g., Hugh Hendry’s flip in market position and candid explanation.
Again, I may not agree with everything he might espouse, but if everything blew up and went to zero, my door and checkbook would remain open if he were looking to start again. The people who seem to disparage my thinking as an “idiot” for not trusting their view? I’ve never taken such pride or felt as smart in being called an “idiot.”
It is absolutely unimaginable to me as one who has both ran businesses as well as started them to hear someone who’s income is derived from the very customers they need to refer to them as: “Idiots.”
In business that is absolutely the worst of all sins. Again to blatantly, unabashedly, disparage, and demean the very people needed to make both the markets stronger as well as grow their own business: I can’t put into words how utterly foolish and stupid it sounded.
If not listening, let alone putting my money to work in the hands of the likes of these people makes me an idiot? Than sign me up for the crazy train: For listening to this trite has become an exercise in futility. Or better yet – idiocy.
© 2014 Mark St.Cyr