Although I think that you have some valid points, don't overreact too quickly. Keep a bit of perspective and think where this market came from.
As an OT aside, when I came in the business around 1980, I went through two years where every stock you bought went down. Tax free bonds at 14 1/2% were a tough sell because everyone was getting 17% in their money market funds. Hard assets were in vogue. The Hunts were busy cornering the silver market. Gold was $800/oz. Oil $35/ bbl and heading higher so everyone thought. Oil stocks and real estate were the big sellers via limited partnerships. I remember vividly my office manager pointing to the ticker tape on the wall and proclaiming it DEAD while holding up a prospectus for some leveraged oil and gas private placement. (I think that actualy was the signal in Auguat of 1982 that moved the market LOL)) The prime rate eventually peaked at something like 22%. The average stock had a p/e of around 7 and the average dividend yield was about 6-7%. Almost every stock traded at a price to sales of less than 1 and you dare not buy any at a Price to Sales greater than 3. The speculative plays of the day were deep drillers rushing like the 49ers of old for that reservoir of black gold 20,000 feet below the Rockies in the Overthrust Belt. They went by names like Empire Oil and Gas and had offices that were nothing more than one room suites in Denver office buildings. Of course, you had the great gold find in Canada called the Hemlo fields and all the speculation that our north of the border friends heaped upon us. The limited partnership real estate was sold to the public $200-$300 per square foot. Finders fees were paid up front....naturally as were the 8-10% brokerage commissions.
During that period, there was one daily business paper, a few magazines and Abelson was still bearish. (some things never change LOL). Rukeyeser ruled the financial airwaves and we all cut Friday Happy Hour short to run home and watch his guests give us their pearls of wisdom. (Harry's at the Exchange had him on TV so Happy Hour was a bit longer and happier there I recollect.) Volume was less than 20 million shares per day....a big move was 10 points for entire average.....and who can forget "Blue Monday" in 1981 when Technician Supreme Joe Granville told us to sell everything and stressed the system with some 40 million shares of volume and a 28 point drop. The Dow bottomed around 800 or thereabouts. The NASDAQ didn't even register. Prechter's Elliot Wave theory bulled by bearish Joe G...Reagan dropped the tax rates, devalued the dollar and we have been off to the races ever since.
What do we have today? Oil still below 1981 prices. A prime rate that hasn't seen double digits in 10 years. The greatest 3 year returns in the history of the market. Gold still 50% below its peaks almost 20 years ago. Price to earnings of 30, 40 or 50 considered normal. Dividends replaced by stock buybacks. Earnings replaced by EBITDA. Price to sales of 10 considered cheap. And of course Faber, the Big Kahuna, the Money Honey etc. 24 hours a day (so it seems anyway) hyping every hot stock every hour every day. Hundreds of websites, like SI, devoted to providing info. And a market at much much higher prices.
So, I ask what is really not to like? A few companies that do favors in order to generate business? Is that a conflict --yes--but it is also salesmanship. And it also part of the process of capital formation. As far as strategy, that is strictly an individual decision. Whether one does it himself like Stewart or uses a professional, that is up to each one of us. Each investor's needs, goals and objectives are different. I have a hard time stretching the conspiracy theory to the point that the Street is dictating market direction. I don't buy it. And I certainly do not need the Justice Department or any other arm of Big Brother interfering with the Gorilla of economic systems---FREE MARKET CAPITALISM. That freedom brings INDIVIDUAL RESPONSIBILITY imho.
Remember, also, it is a 'market of stocks' and not a stock market. The two great emotions that have consistently moved markets are FEAR and HOPE. The problem, as the stock operator, pointed out is that "most people should be fearing when they are hoping and hoping when they are fearing."
In all, I think the game is very fair, much more so than 20 years ago, and getting fairer every day. But, as I mentioned earlier, the individual investor has to take responsibility for himself. He has to learn to dissect relevant information from hype. He must identify what type of investor profile is suitable for him (trader- ltb&h-etc). He must do his homework or find someone he trusts. (the role of the professional whether it be a mutual fund, individual portfolio manager, financial planner or registered rep).
A smarter, more intelligent investor will defeat the scammer and equalize any 'manipulation' by market operators.
Sorry for the lengthy post. I hope it was of some value to you in terms of perspective. Best of luck with your investments especially our GBLX.
Bob |
