Occasionally I will read a promotion piece in the marketplace that resonates. That’s not to say I go looking for confirmation of my thinking, but only to review in my mind a particular article’s common sense logic. Recently I came across such an article by Brian Bolan, a Zack’s Research Analyst, called “Big Drops Are Big Opportunities”.
It’s true that this week has been a loser for me as I try to adjust to new found knowledge that requires me to alter my trading tactics. I’m speaking of the extreme market volatility that is crashing some stock prices and then soon after reversing their direction, but in the meantime leaving us bewildered and asking what just happened here.
Momentum investing, on its own, is hopeless in the current market environment just as the trajectory of an incoming warplane is stopped in its tracks by a missile fired by defense forces. But so too is investing in quality no longer a good investment strategy because, as I had pointed out this week, just hours after two well-known broker Analysts issued Buy recommendations with higher Price Targets for one high Quality stock I hold, the stock was hammered about -10 percent. What happened? No bad corporate reporting or news coverage. No insider selling. No reasonable explanation related to investment merits. Simply, a “Big Drop”.
Could it be that the ETF industry, which itself is under control by a very few organizations in the world, is using these examples to tell the rest of us once again that stock picking and market timing are dangerous to our wealth? Of course, that’s their marketing theme, which I find to be ridiculous because I’m a professional investor, one who has to know what I’m invested in and its investment merits as well as the preferred time in the market cycle to buy the stock. But, is that really the problem with capital market volatility today? I think not.
If the ETF industry is behind the market intervention I complain about, then why are ETF investors being subjected to the same massive price volatility as we all are? No, I don’t think the intervention is coming from the industry’s sell-side. The problem is a bigger one.
As a professional investor, I cannot accept what is happening here without investigating the possible causal factors. My investigation has shown me the source of the problem. I wish that independent and objective academic researchers would join me if only to give credence to the clear-cut evidence that market interventionists are now in control of our capital markets.
Who? Let me point my finger directly at the Western World’s most powerful central banks and the role played by ex-Goldman Sachs senior executives in setting up and managing their trading desks, who today are the collective team of Fed Heads. For culprits look no further than Bill Dudley, Mario Draghi and Mark Carney.
If the answer is not there — and I believe it is — then it must be Laurence Fink, the man who took BlackRock from zero to $5 trillion in assets in under 28 years based on his ubiquitous Alladin technology.
All I can say is that, as a free market patriot, I am upset that, whomever the culprit, our elected representatives have permitted this to happen and go on unchecked. Enough is enough.
I’m not going to say more because I wish to leave it to the public to figure out. Meanwhile, I have a job to do, one that has been made very difficult for all professional investors — unless we happen to be in bed with these interventionists and their allies, the senior executives of several Humongous Banks & Brokers and Private Equity Firms.
For background information, you might want to consider this from Wiki:
“The New York Fed is the largest in terms of assets of the twelve regional banks. Operating in the financial capital of the U.S., the New York Fed is responsible for conducting open market operations, the buying and selling of outstanding U.S. Treasury securities. The Trading Desk is the office at the Federal Reserve Bank of New York that manages the FOMC Directive to sell or buy bonds.[6] Note that the responsibility for issuing new U.S. Treasury securities lies with the Bureau of the Public Debt. In 2003, Fedwire, the Federal Reserve’s system for transferring balances between it and other banks, transferred $1.8 trillion a day in funds, of which about $1.1 trillion originated in the Second District. It transferred an additional $1.3 trillion a day in securities, of which $1.2 trillion originated in the Second District. The New York Fed is also responsible for carrying out exchange rate policy by buying and selling dollars at the discretion of the United States Treasury Department. The New York Federal Reserve is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee’s vice chairman.”
“The bank moved to its current location in 1924.[7] The Federal Reserve Bank of New York maintains a vault that lies 80 feet (24 m) below street level and 50 feet (15 m) below sea level,[8] resting on Manhattan bedrock. By 1927, the vault contained 10% of the world’s official gold reserves.[7] Currently, it is reputedly the largest gold repository in the world (though this cannot be confirmed as Swiss banks do not report their gold stocks) and holds approximately 7,000 tonnes (7,700 short tons) of gold bullion ($415 billion as of October 2011), more than Fort Knox. Nearly 98% of the gold at the Federal Reserve Bank of New York is owned by the central banks of foreign nations.[9] The rest is owned by the United States and international organizations such as the IMF. The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal, which it stores at no charge to the owners, but charging a $1.75 fee (in 2008) per bar to move the gold.”
“In 2009, the New York Federal Reserve Bank commissioned a probe into its own practices. David Beim, finance professor at Columbia Business School submitted a report in 2009, released by the Financial Crisis Inquiry Commission in 2011, saying “that a number of people he interviewed at the reserve bank believe that supervisors paid excessive deference to banks and, as a result, they were less aggressive in finding issues or in following up on them in a forceful way.” [17] Following Stephen Friedman’s resignation [edit: Friedman had been CEO at Goldman Sachs and board member through to May 2013 as well as Fed NY head] on 7 May 2009, Denis Hughes, formerly Deputy Chair, was designated as Interim Chair. In 2012, Carmen Segarra, then New York Fed bank examiner, told her superiors that Goldman Sachs had no policy governing conflicts of interest. She was “fired in May 2012 after refusing to change her findings on the conflict-of-interest policy and sued the New York Fed October 2013”. In April 2014 the U.S. District court in Manhattan dismissed the case, “ruling that Segarra failed to make a legally sufficient claim under the whistle-blower protections of the Federal Deposit Insurance Act”.[17] In September 2014, Segarra´s secretly recorded conversations were aired by This American Life and the New York Fed was accused of political corruption by being a “captured agency”, i.e., subject to regulatory capture, of the banks which it supervises.[18][19]”
So, is it the Rule of Law or the Rule of the Fed? Your member of Congress ought to seriously contemplate the fall-out when the public gets to understand why America is failing today.
