If you have been watching the financial porn on CNBC lately, you have probably seen the herd of bulls run amok. They are justifying buying for a multitude of reasons - some of which neither make sense or are even true. John Hussman points out in his weekly letter to investors that the talking heads on CNBC are straight out lying to American viewers in order to feed this Bull Frenzy. He writes,
"It's fascinating to watch the increasingly carnival-like atmosphere on CNBC on any given day (I generally catch about half an hour with breakfast before the market opens, to hear the prevailing arguments and get the tone of investor sentiment). One quickly finds that the cheerleading tone of the late 90s is back, and the greater fool theory is in full bloom, with investors regularly encouraged to "buy high and sell higher." Lately, the bullish arguments are running so fast and loose that it is apparently no longer a requirement that they have any relationship to fact.
Take for example a remark last week that "mutual funds are sitting on piles of cash that these managers are going to have to get invested."
Wow. That's just a bald-faced fib. It could not be further from the truth. Cash as a proportion of mutual fund assets has never been lower. Never..."
Let's take a look at some of the other lies and misrepresentation that perpetuates such mass hysteria as we have seen lately.
Today, however, was one of those rare down days of the latest rally. I was not watching CNBC today, but I will bet at some point - probably this morning when the Dow was down 70 - the words "Great buying opportunity" were uttered. These three words are spoken like the Budweiser frogs on a down day NO MATTER what market environment we are in.
One must understand the reason for this. Most of the people on CNBC are not absolute return hedge fund managers - they are long-only money managers or analysts. These people benefit from the market going up. Not only that - CNBC as a network reaps the rewards as well. Therefore, most subjective commentary (and some objective presentation of the 'facts') will have a positive equity market bias. If the CEO of XYZ Corp was on TV and pumping his company's stock all day long - viewers would see through this facade quite quickly and it would lose its effect. But CNBC conspicuously throws tons and tons of these "experts" at us all with the same self-interest that the CEO of XYZ Corp would have. Instead of exhibiting healthy skepticism, we take what they show us as fact and we "Buy Buy Buy!" - to quote a cheerleader.
Let's look at some other catch-phrases these people like to use.
A down day is never a good day at CNBC HQ, so they try to equate down days with "profit-taking". This takes the emphasis off the red on the screen and puts it back on the "buying opportunities" they are about to tell you about. It reinforces this upward bias... "Oh you didn't have profits to take today? Why not? Well then, glad you're watching because today is an excellent BUYING opportunity."
Huge sell-offs are not called bloodbaths or crashes but "corrections" which sound much more tame and harmless when compared to an awful market crash. It is funny because it implies something was wrong with the markets and we have a "return to normalcy"- but we all know that yesterday they told us it was a great "buying opportunity". Usually these are blamed on China, computer errors, acts of God, and heavy profit taking. "Corrections" are usually accompanied with "buying opportunities" and other meaningless words - such as stocks are "On-sale" or "Market Overreaction".
This brings us to another commonly used word on CNBC - especially during bullish times when P/E's are starting to creep up - "Multiple Expansion". When you hear "Multiple Expansion" you must think "Over-valued". That is all it means. This is a word that simply means that stocks are beginning to or should begin to trade at more times next year's earnings - implying some sort of earnings growth. Last time I checked this is not a phenomena but but stocks most likely getting expensive and markets getting overly optimistic. Since we know nothing about how earnings are REALLY going to grow, "Multiple Expansion" is as meaningless as Terror Alert Orange.
This leads me to the title of this thread. When is it a great Selling opportunity? When we have been up 23 out of 26 days? When markets are higher but earnings growth lower and economic fundamentals poorer? The cheerleaders of Wall Street will never say it is a great selling opportunity, but every buying opportunity MUST have an equal and opposite selling opportunity or else that would imply a infinitely increasing market and a market dip would be insignificant as "opportunities" go. I can't tell you whether it is or it isn't - but I can tell you you won't hear it from the Financial Pornographers on CNBC.
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