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Mohamed El-Erian, the chief executive of top bond fund manager PIMCO, on Tuesday said the rally in U.S. stocks had topped out because valuations have shot up too quickly.
Asked if U.S. stocks have hit a wall, El-Erian told Reuters Television: "I think we have, and I think what you are seeing is a massive tug of war going on."
World stock markets fell Monday, with the Dow Jones industrial average .DJI declining 2 percent and China's Shanghai Composite Index .SSEC falling 5.8 percent, shaking off recent optimism amid doubts about the sustainability of a solid economic recovery.
Asked if U.S. stocks have hit a wall, El-Erian told Reuters Television: "I think we have, and I think what you are seeing is a massive tug of war going on."
World stock markets fell Monday, with the Dow Jones industrial average .DJI declining 2 percent and China's Shanghai Composite Index .SSEC falling 5.8 percent, shaking off recent optimism amid doubts about the sustainability of a solid economic recovery.
- Newsmax
Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades.
Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show.
The recommendations didn't work because companies with the worst earnings led the 45 percent gain in the Standard & Poor's 500 Index since it fell to a 12-year low five months ago.
Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show.
The recommendations didn't work because companies with the worst earnings led the 45 percent gain in the Standard & Poor's 500 Index since it fell to a 12-year low five months ago.
- Bloomberg
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What Chinese Authorities Do Not Want You to See
By Tom Dyson Tuesday, August 18, 2009 What Chinese Authorities Do Not Want You to See -
How to Play the Collapse in Meat Prices
By Tom Dyson Monday, August 17, 2009 How to Play the Collapse in Meat Prices -
The Fight Between Inflation and Deflation is Over
By Porter Stansberry Saturday, August 15, 2009 The Fight Between Inflation and Deflation is Over -
Are You the Smart Money or the Dumb Money?
By Dr. Steve Sjuggerud Friday, August 14, 2009 Are You the Smart Money or the Dumb Money? -
Be Smart With Your Money... Buy This Guy
By Dr. Steve Sjuggerud Thursday, August 13, 2009 Be Smart With Your Money... Buy This Guy
Watch Your Back on Wall Street, Seriously
By Dr. Steve SjuggerudWednesday, August 19, 2009
| I remember my first time "getting used" by Wall Street... It was for 500 bucks. But I was disgusted by it. It was in my own firm! Here's the story... I was a broker, probably 21 years old (I started college at 16). Our company had gone public a few months before. Dr. Glenn, one of my good customers, wanted to buy our company's stock, at a good price if I could get it. Over the loudspeaker one day, our head trader (the guy who buys and sells stock all day) said, "1,000 shares of our stock at the bid, first one to call me gets it." This sounded perfect for Dr. Glenn... If the stock normally traded at $10, I could now get it for $9.50! I called him right away and told him about this. He took my word. I called the head trader and was happy to get the shares at $9.50. Then, a terrible thing happened... The bid on the stock fell to $9. What was going on? I'd just bought for $9.50. My customer was down instantly, and now I looked really bad to him. In short, my firm's head trader sold me down the river and basically cheated Dr. Glenn – a customer of our own firm – for a measly $500. He had a bunch of shares of company stock to dump... and he found a sucker in me. I really couldn't believe it. The head trader didn't do anything illegal. It was just dirty. I felt bad. I should have been smarter about it for my client. I was young and gullible... I didn't think people would be that dirty, especially at my own firm, sitting 30 feet away from me. But there was nothing I could do. There was nobody to complain to... nobody would have cared. The brutal reality was that the head trader made much bigger profits for the firm than I did as a young broker. I was disposable. He was not. He'd done nothing illegal – he just found a sucker. I was reminded of this story on a trip to New York this week. I met several Wall Streeters who – after hearing I simply work for my subscribers and don't take kickbacks for anything – had a hard time grasping the idea. Yesterday, during meetings in New York, successful investors told Porter Stansberry and me over and over again, "We really like you guys and your ideas... you don't seem to have any conflicts of interests... you write what you think." It is a simple business idea... you like our ideas, you keep subscribing. But maybe we shouldn't have taken so much pride... Maybe the "honest buck" thing – the lack of any conflicts of interest – is what makes our writing and our ideas particularly attractive. Because on Wall Street, you never know if a guy is telling you the whole truth or if he's simply looking out for his own pocket. It's just the way business is done there. I'm sure the head trader at my old firm did what he did to me without thinking about it... without losing a moment's sleep. His business was "taking" people. But nearly two decades later, that trade still sticks with me. I still feel bad for Dr. Glenn. (Dr. Glenn, by the way, became a subscriber of ours, and I've bumped into him at our conferences. Thanks, Doc, for sticking with me.) The "moral" of the story is this: When it comes to investing, you have to question the motives of the seller of the investment. Always. If you think it's rude to ask a salesperson how he gets paid, well, get over it. Ask him. He will tell you. It's not a secret. It's fine for him to make a good living... you're concerned about his incentives... his motives. Ask as much as you can. Heck, by simply asking questions, he'll take note of your interest and make an extra effort to recommend the things you want. If it's a mutual fund you're buying, ask why you should buy one over another that does the same thing but with lower fees. If it's an investment newsletter, read the fine print... because the newsletter publisher must disclose if they're being paid by a company to write up that company's stock. While you can't control an investment's performance, you can control your fees... so ask the questions. When it comes to your investments, you must watch your own back... because nobody else will. Good investing, Steve |
IT'S A BULL MARKET IN GOLD MINERS
We're big "trend watchers" here at DailyWealth. And about once per month, we check in on the strongest trend in all of finance: the uptrend in gold that began in 2001.
In today's age of Monopoly money bailouts, gold is becoming a sort of "rich man's" currency... a way to store savings that cannot be printed and inflated away by a gang of bureaucrats. Gold is the only asset that has climbed every year for the past eight years. It rises as paper currencies decline in value.
Today's chart is a sort of corollary to the long uptrend in gold. It's the uptrend in one of the world's top gold mining stocks, Goldcorp (GG).
Goldcorp is a major holding of our "inflation hound," the gold stock ETF. As gold goes steadily rises, so do earnings and net asset value for Goldcorp. As you can see from today's chart, Goldcorp has hitched its wagon to the golden uptrend. The stock has climbed from $5 to $35 in the past eight years. Despite the big selloff in 2008, it's still a bull market in gold mining stocks.