Apparently, many of you prefer that we call the stench emanating from Washington and Wall Street by its proper name, even if it is a bit… improper.
On Monday, we asked if you thought we should spell out the word B.S. in our masthead, just so there is no confusion about what we really think. Hundreds of IDE readers wrote in.
The majority of you seem to prefer a bit of profanity with your market research, considering that the political and financial landscape is so profane to begin with. MD writes, "I vote to keep the bullshit in, 'cause that's all we're getting from Wall Street and Washington!"
PB concurs. "Yes it is quite all right, nay refreshing, to hear somebody telling like it is. The public has been blind to the chicanery, cheating, lying and outright stealing of our so-called leaders. Wall Street and politicians have led us into a hole we will not see the top of in our lifetimes. R.I.P."
CT in Tennessee believes that, "honesty is the best policy and the more blunt the better." WB from Australia agrees. He suggests that our own "attitude to frankness is bullshit" if we don't write the word. WD doesn't see what the fuss is about. "What are we, a bunch of tender-eared namby pambys?" he asks.
Yes, some of us are a bit tender-eared, WD.
LW asks why we would degrade our publication "by joining the Garbage Language Gang." RL says, "No, it is not ok. Intelligent people are able to make their point without resorting to expletives and questionable language. When I see inappropriate language, it tells me that the speaker is not well enough educated to express himself intelligently."
KS agrees. "It's like calling someone names because one cannot counter their arguments," he writes.
And finally, LA says, "What is wrong is that on all sides of life, we are witnessing the progressive decadence of our culture. Do you want to contribute to that?" No, LA, we do not. And while we believe a word is just a word, we get your drift.
In this case, we will side with the slightly smaller minority. We won't spell it out in our masthead. But in addition to our critical analysis and profitable advice, you can be sure that we will continue to uncover institutionalized deception. And we will call Wall Street and Washington on their B.S. every chance we get.
Now, turning to more important matters…
"This is how a market looks when it's out of gas."
That's a quote from IDE analyst Steve McDonald following the Dow's 185 point plunge on the first day of September.
Even though the news was good the market tanked
Despite some good numbers from the housing market and an ISM number that beat estimates, the market still lost ground. Steve points out that the ISM (The Institute for Supply Management Index), which measures manufacturing activity, crossed over to 'non-recessionary' territory for the first time since January 2008.
Steve says the market is looking ahead and doesn't like what it sees. Mr. Market ain't the only one who doesn't like the view.
Corporate insiders are selling like crazy
Over two weeks ago, we reported that corporate insiders are heading to the exits in droves. This week, Bloomberg TV ran an interview with Tom Biderman, CEO of Trim Tabs Investment Research, a firm which tracks investment flows.
Biderman says that corporate insiders are selling at a furious pace. He says that selling has outpaced buying by 30 times and that corporate buybacks and corporate purchases of other companies' shares are virtually non-existent.
"If you look at the aggregate data, hedge funds and mutual funds have to be fully invested here," he says. "Shorts have covered. Short interest is down 10%. And margin debt is up. So investors are borrowing to buy. We don't see where the money is going to come from to keep stocks from plunging."
Don't be fearful… be cheerful
Nobody's bummed out when their favorite store has a sale. Quite the contrary. They hustle down and stock up.
If you've followed our recommendations the last several weeks to move your stops closer to the market, your downside is protected. A sharp correction means some great buying opportunities will be coming your way. And Steve McDonald already has his eye on a few.
We pay close attention when Steve speaks. He has more than 20 years of direct experience in the markets. And because he's worked with retirees most of that time, his first instinct is toward safety. If you're looking to make exceptional returns… and still sleep at night, we can't recommend his research highly enough. Steve's premier publication is The Bond Trader. You can learn more here.
China in a bear market?
Yup. It's official. The Chinese market has fallen 20% from its peak in early August. Surprised? You shouldn't be. Our own Asia expert Andrew Gordon has been banging the drum for months giving his readers plenty of early warning. Andy has a long career in international business, including considerable time in Asia. He's also written books on international trade.
We value his insight on these matters. And so should you. Here is some of what he's had to say over the last year. It is just as relevant today:
- "China's recovery is looking every bit as bumpy and uncertain as ours. I have absolutely no faith that a centrally commanded economy has an advantage over free markets in getting healthy again. I've been to China too many times to entertain such naive thoughts.
- "I've never been impressed with how China's elitist politicians have managed their economy. It's all built on cheap labor. And now several Asian countries – like Vietnam and Cambodia – offer cheaper labor than China.
- "45 percent of China's economy relies on exports. Its exports have plunged with global demand. Thousands of factories making for-export items have closed. Will one person singing the praises of China's massive stimulus package explain to me how building roads in Jiangxi Province will help factories in Guangdong get back on their feet?
- "Frivolous projects are getting funded. This is something the Chinese press doesn't like to talk about. But evidence is leaking out that huge sums of money have been squandered on useless and non-productive projects.
- "The explosion of sweet heart loans from state-owned banks is going to bite China in the back-end. When China issued directives to open up the vaults and lend, lend, lend, it was an open invitation for local big-wigs to drag out their favorite pet projects. The vetting of these of these loans was short and sweet. We've seen in the U.S. how bad loans can take an economy down. China's willingness to go down this road can mean only one thing. Their political leadership and economic elite are even more arrogant than ours.
Andy sounds a positive note
When not writing about China's slide into the abyss, Andy has put together some brilliant
ideas about protecting and growing your wealth in the years ahead. Check out his flagship publication, INCOME.
Good Investing,
Bob Irish
Investment Director
Investor's Daily Edge
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