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Tag Archives: stocks

Dow down almost 300 points at this moment, Fear of a Fed created bubble chills markets

In the attached article from CNBC the point is made that the real bubble is likely an inflated confidence in the Federal Reserve.That come what may, the Fed will intervene in markets and buoy them. So what if stocks are over extended, Yellen and the FOMC will save the banker’s posteriors. As we’ve said before this sounds very much like “housing prices always go up” to us. If sentiment regarding the Fed were to change, if traders were to fear that things were bigger than the Fed, a downdraft could be wicked.

We’ll see. There’ve been many blips over the past 5 years and for the most part the pro-Fed folks have been right as far as equity prices are concerned. (Little else.) Maybe this is just another blip on the way to Dow 20,000 and beyond.

But maybe not.

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Study: Insider trading is widespread (I am shocked, shocked!)

There is actually a pretty good case for the idea that insider trading should not be illegal. That information is information and that sales or purchases of stocks based on such information just makes the market more efficient.

That aside it is still illegal and that means if you and I were to engage in it we might go to jail. For others however this does not seem to be a concern.

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‘Why is Warren Buffett so rich? (Crony capitalism, anyone?)’

Interesting article. It is very true that the Oracle of Omaha has benefited handsomely from sweetheart deals and political connections over the years. He has played the crony game very well.

I will say though, as much as I agree with the general sentiment of the author, I’d still go long on the USA before Kazakhstan. We do still enjoy the reserve currency of the world. As long as we do the bet is still to the upside for US equities generally. Reserve currency status is the linchpin. If you ever hear that the US dollar is no longer the reserve currency it is time to sell. Of course when we hear it it will be too late.

An aside. – My first real job was working for GEICO (One of Warren Buffett’s companies. His “cash cow” as he calls it.) selling insurance over the phone. To this day – “Thank you for calling GEICO Direct. This is Nick Sorrentino speaking. How can I help you?” – rolls right off the tongue.

(From Nomad Capitalist)

…allow us to examine just how Warren Buffett became so wealthy, because while he is obviously an astute investor responsible for generating huge returns, he has also enjoyed advantages few other Americans do.

It is such advantages, propped up by his cronies in government, that perhaps contribute to so much of his optimism.

To begin with, much of Berkshire Hathaway’s holdings are in the equities markets. While Buffett has done an excellent job over the years of picking winners and losers, he has no doubt benefitted from the amazing impact that inflation – and recently endless money printing – have had on the American stock markets.

Click here for the article.

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