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“Buy
stocks! It’s a great opportunity! They present great value.”
This is
the non-stop mantra espoused on financial media. It’s simply astounding given
that
1)
Everyone with a modicum of sense knows stocks are in a bubble
2)
Financial media viewership is plunging to multi-decade lows (you think they’d
consider changing the content?)
Here
are a few thoughts no one in the mainstream financial media seems to
address.
First
of all, corporate insiders are dumping shares at a pace not seen since 2000.
That’s
correct. The folks who know more about their companies and future growth
prospects than anyone in the world are unloading their shares as quickly as
possible.
Investment
legends are doing the same. Warren Buffett, perhaps the single biggest fan of
stocks in the last 100 years is currently sitting on over $50 billion in
cash. Buffett’s partner Charlie Munger recently commented that he has not
bought a single stock in his personal portfolio in over two years.
Aside
from Buffett and Munger, Carl Icahn, Stanley Druckenmiller and numerous other
investment legends have warned of a potential market catastrophe. George
Soros has even taken out a record size bet on the market collapsing.
Beyond
the legends, institutional investors have been net sellers of stocks for most
of 2014. The same goes for hedge funds. Do you think they’d be doing this if
they thought stocks were offering a lot of opportunities and value today?
Market
volume is collapsing to a dwindle and fewer and fewer companies area
participating in the rally. Both of these are clear signs of a top forming.
Nearly half of the stocks on the NASDAQ are down over 20% from their recent
peaks.
Global
growth is slowing down sharply. The only non-manipulated economic data point
out of China (electricity consumption) shows GDP growth there is HALF of the
official 7.5%.
In
Europe, Italy is back in recession for the third time since 2008. Germany’s
economy contracted in the second quarter of 2014 and will likely be in
recession before the first quarter of 2015. France has registered zero growth
for six months now. And the US is showing anemic growth if any.
So we
have corporate insiders selling the farm, investment legends warning of a
collapse, institutional investors selling stocks, and global growth slowing
rapidly.
And now
is the time to buy stocks?
Take
note and prepare.
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