BillI have to comment on the return of disgraced analyst/internet maven/ and founding contributor to the tech implosion of 2000, Henry Blodget.  For those of you who don’t remember, Henry made his name back in 1998 by predicting Amzon.com would rise to $400.  And it did, and it did so by doubling in a matter of months (even rising above $600 on a split pre-basis before the bubble burst sending the stock back to single digits split-adjusted in 1991).

After the bubble burst, Henry and his reputation fell on hard times.  It seems that emails were discovered that plainly showed in private, his personal feelings about the stocks he was formally pushing at Merrill, Lynch were very much contrary to his public recommendations.  In 1993 he was fined $2 million, forced to disgorge $2 million in ill-gotten gains and he was permanently barred from the securities business (link to SEC release). With this track record why would he be allowed to profess investment advice anywhere? Well, the same First Amendment that protects my right to rant and rave in kortsessions, protects Henry’s right to prognosticate and opine as long as he is not working for or in the securities business: and so he does, as editor and CEO of Business Insider, a business and analysis site.

Does this mean that the financial news media, a la CNBC, are compelled to give Mr. Blodget the airways and whatever mantle of credibility they have left to help him get his message out? I mean it is like background checks for firearm sales or disclaimers on the Jim Cramer’s advice.   He could not pass a background test as an honest purveyor of investment research; and, at the least, a disclaimer should precede his guest shots.   CNBC, however, never disappoints when it comes to low standards, so I was not surprised to see the “new, improved” edition of Blodget on “Street Signs”, sitting in on segment anchored by Maria Bartiromo (that paragon of financial wit and wisdom) and Tyler Mathison.  For some viewers, not familiar with the nuances of the tech bust, Blodget’s appearance may not ring a bell, but for me all the alarms went off.  It proved, once again that you cannot take these folks and their guests seriously when making decisions about your money.   I ended my headline, “Henry Blodget, Alive, Well and Rehabilitated?”, with a question mark for good reason. You may get the picture from the attached link to a recent article from Salon.com about Mr. Blodget’s Bitcoin advice.

What do you think?

The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities.  I may,  from time to time, mention certain securities for illustrative purpose, names where I personally hold positions.  These are not meant to be construed as recommendations to BUY or SELL.  All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.

 

Session 21—Whistling Through The Graveyard—Hats off to CNBC!!

It is very rare when I have something nice to say about CNBC. But I do today.  They conducted an excellent interview this morning with Mark Mobius, Executive Chairman of Franklin Templeton Emerging Markets Group…a very credible source.  Becky Quick and Joe Kiernan were extremely differential to Mr. Mobius and his long, distinguished career managing […]

BillA better question might be:  Is it a normal market occurrence and should I be alarmed?  My answers are YES and NO.  I answer this way because a ten or fifteen percent correction, after the run we have had, would be perfectly normal and probably very scary; but not the end of the world.

I bring this up because my daughter has a co-worker who has been reading this blog and said, “If the market crashes, he is going to come and visit me.”

First of all, let me say, as I have said before, my blog is not the divine word of the Lord.  We make mistakes. What we write about is based on five decades of experience with the market, economy, media and politics.  I realize that I have been very constructive in these posts.  My positive view is based in part on the premise that after thirteen years of flat market (point to point), I believe you have a good chance for longer-term positive returns vs. those available in the fixed income markets. To wit, Professor Jeremy Siegel, in his book “Stocks For The Long Run”, puts these compounded annual total real returns in the area of 7%.  This is, by the way, for a period that dates from 1802 to 2006.  This does not mean there were no risks and no corrections.  There were tons over this 200+ year period, including the crash of 1929 and subsequent bear market(s).

 What is interesting here is that if you examine the last most recent flat market period before todays, you would find stocks returned (1966 to 1981)  –0.4% on a real compound annual basis.  Most people had had it with stocks in 1981, just as they have had it this time around.  Equities were a dirty word.  Following that gruesome performance in the next 17 years they returned 13.6% on a compounded total real return basis (the stuff dreams are made of).  Even though higher numbers might be possible, a real (adjusted for inflation), long-term 7% total compounded number still feels much better to me than a 1.77% ten-year U.S. treasury (not adjusted for inflation).

What I am suggesting is that it may be safe to get back in the water.  This does not mean to take all your money and throw it in the market immediately, especially if you have been sitting this one out.  If you don’t own stocks, you probably should begin to piece money into the market over time.  If you do own stocks and are leery about the market based on the happenings of five years ago, you need to view the market, economy and risks through a different prism.  Quit looking in the rear view mirror.  We wrote extensively on this in session 7 “My biases…” It is about inflation and why owning assets may be the best way to protect your money and why lending money (buying bonds—the current safe bet) may be no protection at all.

What’s past is prologue”

Taking the Bard a bit out of context, “What’s past is prologue” in a market sense. That does not mean that the next market blow up, a la 2008, is just around the corner.  It takes time, maybe decades, for things to bubble up to that kind of catastrophe (check out Session 3, “Current Events”), and there are always risks of loss in the short run (if you sell).  In the long run, if Jeremy Siegel’s work is correct, there appears to be a lot of opportunity out there.

So when is the correction coming and how bad will it be?  I haven’t the foggiest.  And neither does the media.  The experts have been calling for an end to this run since the presidential election in November. It just may be good to stop fretting and focus on the potential long-term prize…a reasonable real return…potentially getting rich slowly.

Your comments and questions are welcome.  If you like what you see, sign on to receive regular updates in the right hand menu.

The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities.  I may,  from time to time, mention certain securities for illustrative purpose, names where I personally hold positions.  These are not meant to be construed as recommendations to BUY or SELL.  All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.

 

Session 19—CNBC = Shameless

If they gave out awards for trend following, CNBC would be a top contender.  To wit, as the market (primarily the Dow Jones Industrials) began its run of new all-time highs at the end of March, CNBC began running the following promo, using clips of its various on–air persona; Sue Herera—“History in the making for […]

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