Juggling Dynamite

Good overview update from Crestmont Research’s Ed Easterling, reminding us that wishful thinking, hopes and all the Fed liquidity in the world cannot change the fact that the secular bear that began in 2000 has much further to go before stock valuations are low enough to launch the next secular bull market once more. See: Nightmare on Wall Street: this secular bear has only just begun.

Money for nothing indeed, as shown in Ed’s chart above, 4 trillion of QE pumping over the past 3 years and counting has only served to reflate bubble prices and suspend the progress needed toward the single digit stock valuations and opportunities that will usher in the next secular boom. Far from saving investors and the economy with their continual interventions, the Central Banks of the world are prolonging the hardship of economic pain and non-productive asset allocation. They need to get out of the way and let free market forces restore investment value.

Somewhere between “Its a wonderful life” and “A Christmas Carol”, slip in a viewing of the new documentary “Money for Nothing” on the history of the Federal Reserve and asset bubbles. I think everyone should watch it. Very well done and less political than I had expected. Here is a direct video link to the trailer.

“Money For Nothing: Inside the Federal Reserve” Official Theatrical Trailer from Liberty Street Films on Vimeo.

You can download a copy for $19.99 on the web at this link. Enjoy with a glass of vegan eggnog or your favorite holiday treats. Happy holidays.

For all those relying on the much marketed “expertise” of their investment brokers/advisers, here is an illuminating story: the Financial Industry Regulatory Authority is considering restricting the ability of brokers to sell a product if they cannot explain its risks to potential investors. Bet you thought understanding a product before advisers recommended it to clients was already a given…well apparently not, see: In soured investments, brokers emerge as culprits and victims.

“For years, regulators have typically pursued brokerage firms over the failure of investments they sold rather than going after individual stockbrokers, because the target was larger and the possibility of reaching a financial settlement was greater.

Now, regulators are shifting their focus in their fight against fraud to encompass brokers. The shift comes even as some brokers are casting themselves as victims, saying they were duped by the same complex products that they once happily sold to customers.

Brokerage firms project a public face of their employees as attentive, diligent and proficient. In television and Internet marketing, they highlight the expertise and sound guidance of their advisers. In contrast to that depiction, brokers are now saying that some products were so complicated that they did not have the knowledge to sell them. Some have sought to have complaints about the products they sold expunged, and others have filed claims against their firms.”

In a world focused on sales and upfront payouts, no one wants to be held accountable for outcomes.