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In my weekly briefing, I said that "Wall Street has lowered estimates to a point where anyone beating these lowered estimates portrayed as positive. We are not going to buy into the spin on these reports."
I had a conversation with someone this morning, and they felt if the market continued higher their clients would be angry that they missed a big move in the markets, and transfer the accounts to another advisor. This comment, while real and valid, reminds me of client mentalities just prior the market meltdown in 2000. In fact, I had some clients of my own saying the same thing. The result;
-One client transferred their account to an advisor who had made his clients 45% prior to the NASDAQ crash. After the crash, the client’s assets were cut in half.
- Another client, who refused to sell saw their assets also cut in half. This client did not want to pay taxes on capital gains, and thought the Dow was going to 20,000 because of a book published by Harry Dent in 1999 entitled; "Roaring 2000s Investor: Strategies for the Life You Want".
Now, Dent is out with the book; "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010.:
In this latest book, Dent uses examples of;
"Demographics of Home Buying"
"The Spending Wave- a double peak in spending at ages 46 and ... "
"The large baby-boom family formation cycle"
Is it just me or does anyone else spot a contrarian indicator here?
As for the investors who don't listen, and threaten advisors with, "if you can't do it I'll find someone who can", I say "Goodbye, Adieu. Aufwiedersehen, and Farewell." This is much better than having them blame you later on when their nest eggs have been pouched beyond recognition.
Raymond James Investment Strategist, Jeffrey Saut had a good article today on " “Risk versus Reward”. I encourage you to read the article.
Mr Saut said;
"A lot of people have missed the rally over the past nine months. Those investors view missing the rally as opportunity lost. Accordingly, we are getting the sense that investors, confronted with these “prospective” losses, are turning into catch-up “riverboat” speculators."
On a related subject, Bill Cara (Capital Markets & Social Equity) wrote on Monday, April 9th;
"Markets are starting off bullish, including precious metals, and US equity futures. Mark my words that only when a list of these private equity and major IPO deals have been completed by HB&B, the Fed/Treasury will then let the equity market to spin in the wind. Not before then. And Treasury rates will not fall until after there is a stock and bond market crash."
The current market trend could continue until the end of May. I am not ruling out 13,000++ on the Dow before the rally comes to a halt. Insider selling has been massive. Today, Brent Leonard from the " Market Sentiment" blog said that corporate insiders were selling at a rate of 19 to 1.
The insider selling trend has been going on for quite some time. See, here's how it works. You take money out of your pocket and buy a stock that an insider sells. They take your money, put it in the bank, and wait for the stock to fall. You sell when the stock goes down. They take their money out of the bank and buy the stock back. Sounds simple to me.
Wall Street's new strategy since the on-line investing boom began has been one big game of illusions. Now that most savvy investors invest with a discounter, or a conflict free independent advisor, Wall Street must use illusions in attempt to keep the upper-hand.
Prior to the year 2000, most investors did their investing through what Bill Cara calls a; "Humungous Bank & Broker or HB&B". These guys make a ton of money through investment banking fee's, and after lying to investors back in 2000 (Enron, WorldCom, Dot-Cons, etc), they lost all credibility with savvy investors.
In short, they must continue to use illusions to get what they want. The real question now is how many investors will the pied piper entice to follow their music?
At the end of trading today;
DJIA: 12720.46, up 108.33
S&P 500: 1468.47, up 15.62
Nasdaq Composite: 2518.30, up 26.40
Big News Today
The Dow to erase all its losses from the February 27th sell-off, and was higher for the eleventh time in twelve sessions.
The S&P 500 hit a 6 1/2 year high.
March retail sales rose 0.7%, stronger than expected.
Former Fed Chairman Alan Greenspan downplayed the risk of a recession in a speech to a group in Japan.
Sallie Mae accepted a $25 billion buyout bid
The 10-year Treasury note was up 7/32 to yield 4.73%.
