Wonder Rally Encourages Bulls - Mike Swanson (02/03/2015)

January was a shaky month for the stock market.

The market wildly went up and down and ended the month in the red.

It wasn't a big down month overall though, but it was a month that brought with it broad internal deterioration inside the stock market and the shoot-down of many popular "safe" stocks such as MSFT, CAT, and INTC.

These stocks all got hit so hard that they are now broken stocks.

For example look at the chart of MSFT, because it's a disaster now:


Internal deterioration like we saw in January usually precedes a violent correction.

But yesterday the DOW rallied almost 200 points to bring a wonder rally that encouraged the bulls to push all doubts out of their mind.

Instead of thinking about making changes to their account the big up day causes many people to now hunger for a new pick to buy.

So Cramer delivered an endless stream of stock picks to the bullish masses that watch CNBC, with his top pick being some company called Boot Barn:


Cramer is the leader of the bullish masses who rely on their television box to tell them what to do, while Jeff Macke is their leader in the world of online videos.

At this point in time I must say that Macke is a bit more interesting to follow than Cramer, who is becoming increasingly more crazy and almost pathetic.

Macke at least has interesting things to say.

In 2007 Cramer gave over 1,000 stock picks to people as the market topped out and continue to spew them at people in 2008.

I'm talking thousands of individual picks in two years.

How can anyone seriously know what they are talking about when it comes to thousands of stocks?

It tells me that it is all just a show and he doesn't care.

Cramer completely backed the bank bailouts that have saddled the real economy and the Fed QE programs that have done nothing to help real people.

But everyone knows in the real world that there is no real recovery.

In the third quarter the government reported a big jump in consumer spending that helped generate a big GDP growth number, but almost all of the increase in consumer spending was due to a big jump in health insurance costs for Obamacare.

It was forced spending in which people got nothing more for their money.

Kinda like QE.

Today Stephen Roach, who was the head economist of JP Morgan, wrote an editorial blasting the Fed:

The real sticking point for QE relates to traction. The U.S., where consumption accounts for the bulk of the shortfall in the post-crisis recovery, is a case in point. In an environment of excess debt and inadequate savings, wealth effects have done very little to ameliorate the balance-sheet recession that clobbered U.S. households when the property and credit bubbles burst.

Indeed, annualized real consumption growth has averaged just 1.3% since early 2008. With the current recovery in real GDP on a trajectory of 2.3% annual growth — two percentage points below the norm of past cycles — it is tough to justify the widespread praise of QE.

For the full editorial go here.

The thing is no one has to be 100% invested in the US stock market to make money.

There are other things to buy.

Last week I bought a commodity that is up 1% on the open today and it isn't gold or silver. I cannot talk about it here, because it is for Power Investor members only.

The point is that there are so many ways to make money that no one has to be totally dependent on what the US stock market does anymore.

Whether you agree with me or not about the prospects of the US stock market everyone knows that diversification by investing in different asset classes is prudent in the long-run, but CNBC teaches people not to do that in fear of missing out on the next wonder rally.

That is why for now on I will fight what they teach, because they are going to destroy people.

I used to like Cramer.

I liked his books and thought he did care about people, but once I realized how many stupid picks he gave in 2007 and 2008 I could no longer deny that it is just a bullsiht pumping show that he puts on and that he will never get people out of this market or encourage them to reduce their exposure to this mess.

He is like a bartender who keeps serving the drunks.

And yes anyone on full margin in this market at this point is nothing but a sick stock trading addict that needs to stop. Money can make made in this market if you are calm and calculated and not CrAzY!




On Friday I did a live video overview of the stock market with David Skarica.

If you missed it go here.

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