Shah Gilani's Archive

The secret momentum driver elevating market indexes to all-time highs, again and again, is none-other than the “passive investing” trend. It’s going on unbeknownst to even the drivers of this momentum bus.

Investors who don’t understand how big an impact money flowing into index funds has had on the market’s performance probably have no idea what could happen if the trend stalls, or worse, reverses.

Here are the pitfalls of passive investing and how bad the fallout could be if passive investors discover the trap they’ve entered, turn active, and sell.

The almost self-perpetuating cycle of rising markets attracting passive investment capital into index products, which boosts the value of indexes as money flows into them, which attracts more sidelined money and compels investors to sell actively managed funds and buy passive index-following funds, which have been lowering their management fees since they aren’t actively managed, which attracts more investor capital into the growing universe of index funds, which keep increasing in value as sponsors and their authorized participants buy all the underlying stocks in the indexes they track when investors buy those packaged products in the open market, is, almost self-perpetuating.

But you know the saying, almost only counts in horseshoes and hand grenades.

The truth is passive investing’s virtuous positive momentum manufacturing feedback loop isn’t a guarantee.

What passive investors aren’t seeing, because they aren’t looking through or behind the mad rush into what looks like a better mouse trap, is that more money flowing into index funds increases systemic risks inherent in the investment.

Not everyone likes to hear good news about the economy.

Typically, political parties out of power want to see seated opponents get clobbered by economic failure.

In this age a real, or virtual recession, could be manufactured given today’s media reach and technological tools when leading to an election if even just in the minds of voters.

So, you need to ask yourself: Is a recession being manufactured right now? Who benefits from a failing economy or just pushing the recession narrative? Could a manufactured recession or incessant recession fearmongering crash the stock market? And, what would happen to you?

Since you just asked by reading those questions, I’m going to answer them for you.

Only, you’re not going to like what’s really happening and how bad it’s going to get.

But you are going to like knowing what you must do to make a ton of money off the very dirty game that’s going to go terribly wrong…

There’s a magical unicorn coming our way, and we’re being offered a ride high into profitable skies if we grab its horn and jump on.

At least that’s what Lyft’s IPO bankers and early investors want us to believe.

The truth is there’s no such thing as a unicorn in real life (in business, a unicorn is a private company that investors claim is worth more than $1 billion), and Lyft isn’t any kind of highflying substitute.

What the upcoming Lyft IPO is more likely to be is a fat payday for bankers, underwriters, and especially early investors, and a bucking-off of late-to-the-party IPO share buyers.

And while Lyft may not have much higher to go, if you’re still interested in learning about IPOs, I have the perfect IPO opportunity for you…

As if two new Boeing 737 Max 8 jets crashing and killing 346 people isn’t frightening enough, government investigations might reveal even more frightening news.

Like the fact that Boeing didn’t require pilots who were certified on 737s to get certified on the new Max 8 aircrafts.

Or like the fact that Boeing marketed the cost savings of the lack of these certifications as a positive.

These facts, and yes, they’re facts, not speculation, are just the tip of the iceberg that sank the Titanic, or rather, brought down the 737s.

Today, I’m going to tell you the real story of what happened, most of which has been kept from the public.

And, as a bonus, when Boeing flops, I’ll show you a way to play the airspace sector…

There was a time when Facebook Inc. (NasdaqGS:FB) was one of my favorite stocks. I mean, I loved it and thought it would be something I’d probably never sell.

Then, all kinds of negative press hit the stock – and my opinion of its worth.

While I’m presently out of FB, I want to buy back in at some level.

The problem is I don’t think the company’s cleared the hurdles that brought it down. The stock probably has lower to go.

FB has made routine mistakes, and one particular lame maneuver it just pulled says a lot.

Here is what’s holding me back from buying the stock and what you can do in the meantime before jumping in…

Last week at the South by Southwest (SXSW) Conference & Festival in Austin, Texas, freshman New York congresswoman Alexandria Ocasio-Cortez (AOC, for short) pronounced capitalism as being “irredeemable.”

That’s nonsense and, frankly, dangerous talk.

Here’s why capitalism is not irredeemable and what’s dangerous about what AOC is saying…

While I’m cautiously optimistic there will be a trade dispute announcement out of the proposed late March summit between President Xi Jinping and President Trump, it won’t be great.

In fact, it will probably be just enough of a positive kind of “we’re going to keep working on it and agree to agree” announcement, with lots of concessions and positives to move the markets up, possibly to new highs.

My optimism is based on the needs of both presidents to make nice for their own reasons.

President Trump wants the stock market to go a lot higher and knows clearing the economic forest of tariffs and uncertainty will do that.

President Xi desperately needs a deal because China’s economy is slipping into indebted slow-growth (and possibly stagnation) and exports are still China’s lifeblood.

But, there’s a big difference between the removal of tariffs and a comprehensive trade deal that covers what’s really at the bottom of the two nations’ “trade” dispute.

And the chance of that happening is exactly between slim and none.

Here’s why…

The suddenly simple answer to funding the Green New Deal, Medicare-for-all, free college, and two Teslas in every garage, making the rounds as Modern Monetary Theory (MMT), is a joke.

Only no one should be laughing.

MMT is not only dangerous for reasons that no one’s bothering to bring up, but also it’s just plain stupid.

Here’s why MMT is really a proposition, why it’s dangerous, and how stupid you must be to believe it’s legitimate…

There’s a problem with the Federal Reserve.

Actually, there are tons of problems with the Fed.

Besides the fact that they shouldn’t exist at all, they are always behind the curve on everything.

Take interest rates, for example.

One of the biggest things the Fed does (the biggest is bailing out their too-big-to-fail bank constituents when they implode into insolvency from their greed) is manipulate interest rates.

The Fed’s original fake mandate was to manipulate rates to effect stable prices – in other words, to curb inflation when it reared its ugly head and guard against deflation when it cast a shadow on the economy.

Not that it matters, because it is what it is, but the Fed’s timing in manipulating rates is mostly what causes inflation or deflation.

Today, we’re going to talk about the wool that’s been pulled over everyone’s eyes, and what the Fed should be doing.

But first, I’m going to share something amazing and potentially very profitable.

Let’s get to it…

Elon Musk, the founder, chief executive officer, and former chairman of Tesla Inc. (NasdaqGS:TSLA), is in trouble with the Securities and Exchange Commission (SEC)…

Again.

This time, he’s in hot water for doing what he agreed not to do in the September 2018 settlement he made with the SEC over his infamous August 2018 “Am considering taking Tesla private at $420. Funding secured” tweet.

What happened this time and what led up to it isn’t just a problem for Musk, it’s a problem for Tesla.

And it’s all coming to a boil…