Don’t be fooled by some analysts

July 11, 2019

Our outlook remains the same; we do expect a “bear market” which has been avoided for several years by near zero interest rates and central bank engineered stock market buying. Many stocks have already commenced a bear market. Keep in mind that buybacks now have totaled over $5 trillion which has added enormous support to the stock market.                                                                                                                                             In the past, bear markets and normal periods of stock market consolidation occurred cyclically allowing investors superb opportunities to invest while specific stocks were cheap or actually “on sale.” Notice that when stocks are undervalued and overlooked, the major brokerages fail to recommend them in a timely manner? Never fails!

The “revered” large American brokerage houses cannot afford to see periods of low volume or bear markets as they cause their profits generally to plunge. A Quebec based institutional money manager recently said to me that when specific stocks are often ludicrously overvalued, they remain strong “buys” by the brokerage analysts. The brolerages must keep their meters running to carry the salary expenses of the incompetent and inaccurate analysts.

Yet, we are usually near fully invested in many underperforming and undervalued stocks. Scandal? What few investors and people in the media are aware of is that if a broker or money manager is at a major American brokerage house, he or she is not permitted to research and choose his or her own stock recommendations for clients. They are restricted to recommending stocks that are covered by their own brokerage houses research departments. Sadly, you know many of the brokerage houses’ research recommendations have a history of being disastrous.

In his bestselling book “One Up on Wall Street, “Peter Lynch said that the average person using a minimum percent of his or her brainpower can run rings around the Wall Street experts. He was and remains absolutely 100% correct in his assessment. Bottom line is to do the research yourself and take advantage of the many quality investment services. Many investment services are free on the internet 

Our analysis shows that less than 5% to 7% of the volume on the NYSE and NASDAQ represent private investors’ transactions. The huge percentages are the high frequency traders and hedge funds. This will create chaos in a bear market.  It will not be nice and it may occur soon.

There are always high quality stocks that represent value, never forget that. And keep in mind that you are far more intelligent than 90% of the so called experts snalysts.