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The New Pharaohs

4/23/2014
By Charles Payne

So Let It Be Written, So Let It Be Done.
-Pharaoh
The Ten Commandments

This week, Bankrate.com published a poll on Main Street's appetite for investing (conducted by Princeton Survey Research Associates), which revealed 73% of adults are no more inclined to invest in the stock market right now, than in the past. I know there is the notion that there is this voracious Main Street appetite for stocks because major indices are at or near all-time highs, but that notion is completely off base. Ironically, the masters of the universe who mostly "say" the market is going to crumble continue to make piles of money...in the stock market.

However, it is a wonderful thing when you can talk up your book, and for a period of time are guaranteed success as individuals, while others follow your lead (and established position). The New Pharaohs are so powerful that they are going after the biggest companies, and are dancing in the grey areas of the security rules and laws. Track records do not matter at this point, because these guys have the world in the palm of their hand:

  • Build a massive position in a company and then get another company to launch a takeover bid- whoa! That is a heck of a trick.
  • Go short a stock then get lawmakers to launch investigations, which taints that company and its underlying shares.
  • Bully, intimidate, campaign, and now collude, all done in plain sight. These guys do not want to be lumped in with the greenmail crowd that once shook down companies for quick scores. These days their prey or targets are laid- out with professional rationale (save the notion of shorting Chipotle Mexican Grill because of Taco Bell), and slide show presentations. It is all on the up and up, and the only thing is that every stock not in their scopes is overbought, and ready to crash.

Talk about an amazing feat- they do a nuts and bolts evaluation of their targets, along with all the other publicly traded stocks in the market, too.

Alternative Agendas

Moreover, I find many of these market masters to be serious limousine liberals that pump gobs of money into politics, make billions in the stock market, and pay lower tax rates than I do, and still get a free pass in the press. Late yesterday, David Einhorn said people should be afraid of what high- frequency trading is doing, and should only use IEX.com, mentioned in Michael Lewis' book. He also said that this is the second tech bubble in 15 years, even if there are fewer bubble names, and the enthusiasm is tepid compared to 2000.

In the meantime, the interesting thing about crashes and panic is that a firm like IEX.com would see its revenues surge exponentially. Einhorn was good enough to admit that he does have an exchange in that venture. He did close out shorts on Chipotle and Michael Kors two retail operations, that he obviously never stepped inside of because one would not need an analysis to see the kind of energy and loyalty their customers have toward them. (Even great and hot businesses can have overvalued stocks, but in the last two years, it would have been a huge mistake betting against those two names.)

Nevertheless, trying to play alongside the big boys with all their fancy tools and advantages has taken a toll on investors and would-be investors. The key for investors is not to "play" the market. In the end, great companies will have great share prices.

Meanwhile, I am sad for young Americans, who waste their youth, stuffing their money under their mattresses, or in savings accounts, only to watch their money lose purchasing power every day.

 

 

 

 

 

 

 

 

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Charles Payne
Wall Street Strategies


 

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