Here's what could really kill this bull market
Deals are the real worry, because they are the true measure of euphoria, which causes people to lose more money than just about any other emotion known to man.
Darn that Snapchat with that $10 billion valuation. We don't need that kind of story now. That's the kind of stuff that always seems to stop the indexes in their tracks. Every time the market gets traction in the Internet, we hear some wild-eyed pricing for a company such as Box or Dropbox or AirBnB or Uber and we recognize that the overvalued mob has some fabulous evidence to use against the bull.
We are always trying to figure out euphoria. We try to gauge it because it is a sign of excess. I absolutely loved Scott Wapner's interview Tuesday with Jeremy Siegel, the terrific Wharton professor, on CNBC's Halftime Report. That's especially as it concerns Siegel's comment that the skepticism is thick and there's certainly not a lot of celebration involving S&P 2000.
Then we hear about $10 billion valuations for profitless companies and we have to go right back to the euphoria drawing board.
Now, I know about the pressure the venture capitalists can put on any market. I know they will get their pound of flesh out of the hot ones. I know they could not care less about what it does to the market overall, because that is not their job.
That is why you never want to see these deals.
Most people are waiting for the Federal Reserve to kill the bull with higher interest rates on U.S. Treasurys. As Siegel made clear, rates could move up 200 or even 300 basis points and it might not kill this market if the economy is good.
I, on the other hand, worry about supply. I worry about too many bad deals overwhelming the market -- which is what happened in this year's horrendous Nasdaq downdraft.
You get too much supply, and you get Snapchat, and Alibaba and DropBox and Box and AirBnB and Uber all trying to get into this market via the IPO chute. This is a market, moreover, that has very little volume to begin with. That will deliver a severe blow to this tape.
Keep that in mind. That's the real killer -- not Fed chief Janet Yellen, not the dollar and not the 10-year bond.
Because when supply overruns demand, interest rates could be at minus 2 percent and it wouldn't matter. Worse, the politico-talkers who argue rates, not stocks, just confuse things further by saying that the Snapchat deal didn't work because of the Fed or some other nonsense.
Then the market gets really hammered.
Deals. Keep track of them. They are the real worry.
They are always the real worry, because they are the true measure of euphoria, and euphoria causes people to lose more money than just about any other emotion known to man, including greed.
Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners. The portfolio is long GS.
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You all do know why they call 'em 'Broker', don't you?
- Because they are not making you any richer.
Happy Hump Day, Fellow Investophiles.
5.5 years of obama policies have created more poor people and less middle class.
5.5 years of obama policies have created a projected 1.5% DP growth for 2014.
One day here the next there Jim. Two days ago it was the Russian Ukraine that would implode the market. We all know it is the complete lack of a competitive alternative that keeps this market going up and up and finally today you agree about what we all know to be the truth. Competition for the investment dollar is at present non existent. And if you were a true capitalist you would agree without competition we are vulnerable to excesses and over reactions so when competition for this market appears we could see some real vomitility. Hence the FED is pussy footing all around and doing these little chit chat weather balloon bombs suggesting a rate increase would be somewhat harmless and some even trying to lead us to believe beneficial. Not a lot different than the stories about how the Robots took all the American jobs. I know dumb is a permanent condition and most believe it to be a non infectious non degenerative condition but as we continue down this path of total De Nile all assumption about human intelligence should be put back on the table. JMHO
because buying his recommendations can bust you quickly
"A group of alumni that has previously criticized for how much it pays its endowment managers is again finding fault after compensation more than doubled in three years at the investment arm.
Harvard Management Co. paid $132.8 million in salaries, bonuses and benefits in the year ended June 30, 2013, up from $63.5 million in 2010, according to tax filings. The company, which oversees the university’s $32.7 billion endowment, employed 324 people in 2012, 19 percent more than in 2009, the filings show.
“We are astonished by what we discovered,” nine members of the class of 1969 wrote in a letter to Harvard President . obtained a copy of the letter dated Aug. 20. Compensation is “increasing at a much faster rate than the endowment, which still has a long way to go before it reaches its pre-crisis peak,” they said in the letter.
Harvard, with the world’s largest university endowment, is still seeking to recover from a 27 percent investment loss from the credit crisis. The value of the endowment fell from a peak of $36.9 billion in 2008 to $26 billion in the year ended June 30, 2009. It posted an 11.3 percent investment gain last year, trailing peers including the, which reported a 14.4 percent increase, and , which had a gain of 12.5 percent.
The university’s endowment operation is different from most schools because it has a larger staff doing internal trading while others use asset-management companies."
A reminder folks... 60% of Harvard grads confess to cheating their way through. The others just don't admit to it.
Higher Education? Never have we had so many useless degrees in charge of non-productive non-enterprise business platforms and corruption like never before. GUESS who has to go?
Gotta side with Cramer here. The problem is that GOOD IPOs soon beget BAD IPOs. Companies with unique products (TSLA) do well, but are followed by companies with invisible, theoretical, or non-existent products--and I include in that sphere companies with catchy names doing something the next hacker down the block can do the same, or better.
Too many bad IPOs, and yes, the skittish guy on Main Street is going to avoid the markets entirely. We already know that half of the public that was in the markets prior to 2008 won't touch stock now. They're at their nearest casino.
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Fed keeps important 'considerable time' language in reference to short-term interest rates, but dissents and dots leave doubts.
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