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.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at firstname.lastname@example.org and on Twitter @tatroshow.