We’ve been criticized for being overly bullish on equities over the last few weeks, paradoxically by institutional brokers who only make money when stocks are going up and investors are willing to buy. But smart brokers use charts, knowing full-well that they can’t count on their own in-house research to even call the direction of the wind during a hurricane, and the charts always tell you to hate stocks when they are going down and to love them when they are going up. Stocks have been going down of late so who are we to fight the tape with such weak arguments as valuation, fundamentals, and economic growth? That being the case, we bow to the chartists, throw in the towel and present here 10 reasons why you should NOT own stocks.
- Gold. It pays no dividend, costs you a great deal to hold, store and insure the physical asset (assuming you have a safe at home) and carries a 20%+ commission each way on trading it. But it’s going up and the chart guys say that means it’s going up. Sell stocks, buy gold. Someday you will be rich.
- Obama. His administration is anti big banks, anti business, fond of high taxes, espouses non-growth producing social programs, and has produced no growth in jobs in his 17 months in office. This, of course, is all information that very few are aware of. All these qualities, naturally, are so popular with the voters that he and the incumbents in Congress are virtually assured of a massive sweep in the mid-term and 2012 presidential elections. We even hear talk of suspending term limits so we may have these excellent statesmen in office forever! Sell stocks.
- BP. While the environmental impact is saddening, no one is sure if there will be a measurable economic impact from the spill in the gulf. BP isn’t in any US stock index so it can go to zero without affecting the indices here but we get to see that belching oil on TV every day and that has to be bad. Sell stocks.
- Uninspiring retail sales. Yup, 70% of our economy is based on the consumer and the latest round of retail sales reports showed only modest growth. So we shall join in with the bears and proclaim the US consumer dead for the 9,378th time in the last decade. Sell stocks.
- Yields on the 10-Year US Treasuries are now a fat 3.28%. That’s almost a hefty 200 basis points above expected inflation according to the current 10-year TIPS. And, of course, we know that the price of gold isn’t saying ANYTHING about expected inflation (just the super-attractiveness of that asset class). Sell stocks, place a penny into Treasuries (not a bank, the Government tells us they are bad) and sit tight in anticipation of the 2020 Bentley (lighter fuse) you will be able to buy with all those guaranteed accrued interest earnings ten years hence.
- Portugal. The rating agencies tell us things are bad there and those agencies employ some of the smartest, most forward thinking experts on Wall Street. And Portugal’s GDP is massive-- almost as big as Arizona’s! This is news. Sell stocks.
- Italy. The rating agencies haven’t yet told us things are bad there so things are OK. But if they do downgrade Italy, Sell stocks.
- Greece. The ratings agencies tell us things are bad there too. This is also news. Sell stocks.
- Spain. Ditto
- No-one wants to own stocks now. We all know the herd is always correct. Go with the herd. Sell stocks.
By the way, if you decoded our acronym, give us a call for this week’s picks.
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