Not Buying What They’re Selling

Bill Tatro
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Posted: Jun 25, 2013 12:01 AM

Wells Fargo Advisors, LLC recently raised their year-end target on the S&P 500 from 1575—1625 to 1650—1700, an approximate 5% increase.  In addition, the mainstream media has just boldly proclaimed, “Retirement savers: it’s not too late for stocks.”  Consequently, as an investor, it appears that you should take immediate action — you might even call it a no-brainer.  Over the past twelve months, with a Personal Consumption Expenditure (PCE) price index of only 0.7% and a so-called 5% additional return expected on the S&P 500, it would appear that everyone should simply buy stocks, and incidentally, I’m quite certain the good folks at Wells Fargo would be more than happy to sell you all the stock you want.  On the other hand, this also seems to be a very ironic situation.  Not long ago, the Bank for International Settlements (BIS) effectively said, “The road that the can has been kicked down just ran out of pavement,” or, in the language of Main Street, “The sh-- is about to hit the fan.”  And since all of Wall Street knows this, the big name trading firms are now taking all the necessary actions in order to deleverage their long stock positions as quickly as possible.  Unfortunately, for all the foolish investors that still believe Wall Street has their best interest at heart, once again he or she are about to be sheared just like the proverbial sheep.  Keep in mind that as you are being told to BUY STOCKS, there’s someone on the other side of the trade SELLING STOCKS — and those firms doing the selling include such names as Wells Fargo, Merrill Lynch, Goldman Sachs, and JPMorgan Chase & Co.  Thus, it should come as no surprise that when we examine past history, whether it’s January and February of 2000, or June of 2008, it always seems that when the big boys are trying to get out, they’re encouraging us to get in.   

Wall Street insists that inflation is the worst enemy of the retiree.  As a result, large trading firms implore investors to buy stock and stay ahead of all the dreaded price increases.  (My next column will take that fallacy to task.)  In reality, most retirees are dependent upon a specific monthly cash flow and the idea that stocks will fit that purpose is totally absurd.  “High dividends,” Wall Street counters.  “High-frequency trading,” I respond.   

The stock market has become a playground for an elite group of people who utilize our current zero interest-rate policy (ZIRP), leverage, and even manipulation, in order to rob and pillage.  Now that Ben Bernanke, the BIS, and even the Central Bank of China have concluded the jig is up, Wall Street in conjunction with the mainstream media are desperately trying to convince everyone that the stock market is the only way.  Sorry to say, but you’re probably not considered as being elite, ZIRP is no help whatsoever, leverage is unthinkable, and the only manipulation occurring is what is being done to you.

Regardless of the “buy now” message currently being declared by Wall Street and the mainstream media, don’t be a sucker.  You must avoid being the “buyer” to their “seller.”  This time around, let them hold the bag — not you.