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The Stock Market Needs Another Exchange Like It Needs a Hole in the Head
As if thirteen so-called “exchanges” and forty “dark pools” aren’t enough, here comes the Members Exchange (MEMX).
Founding members of Bank of America’s Merrill Lynch, Morgan Stanley, UBS Group, Charles Schwab, TD Ameritrade, E*Trade Financial, Fidelity Investments, Citadel Securities, and Virtu Financial claim the new trading venue slated to open in 2020 will feature lower costs, greater transparency, and simplified order types.
Seems all well and good, but what they’re never going to admit is why they’re really pushing another exchange into an already fragmented, liquidity draining, churning ocean of viciously competing trading venues.
But I’ll tell you.
IBM is Going Right Back to the Dump Where it Belongs
On Wednesday, shares of International Business Machines Corp. (NYSE:IBM) jumped more than 10% on its better-than-expected earnings report.
The stock closed at $133.34, up 8.8% on the day.
Calling that remarkable is like calling the Grand Canyon a ditch.
It’s remarkably ridiculous, because IBM is the worst managed company in America – and its stock is heading right back where it belongs, in the garbage heap.
And if you play your cards right, you could make a quick killing as it falls…
How Do Ya Like Them Apples? Here’s Why This This Company Went Rotten
Poor, tarnished Apple Inc. (NasdaqGS:AAPL).
It did everything right for decades, making itself the first company in the history of the world to be worth one trillion dollars.
Then it fell off analysts’ conviction buy lists, and Apple’s stock got hammered good and hard.
What suddenly happened to the most valuable company in the world? How could it lose almost $300 billion in value in a matter of weeks?
Truthfully, what happened to Apple was mostly its own fault. Sure enough, it got caught up (or down as the case may be) in the market’s October selloff, but that wasn’t unexpected.
In hindsight, Apple held up better than the market last October and better than its FAANG family members did.
What took the shine right off the most valuable company in the world, after its all-time high of $233.47 in October, was the company’s announcement on November 1, 2018, not a month after its high water score, that it would no longer breakout iPhone sales in its earnings.
The stock got hammered – hard.
That self-inflicted wound, some say death knell, happened just as the Dow Jones Industrial Average, which had traded down close to 24,000 at the end of October, began a robust rally.
Only a week and a half into November, the Dow got back above 26,000.
Apple, not so much. In fact, not at all. Apple stock continued to slide, like it was falling off Everest.
The stock traded down to $142, just shy of a 40% dump off its high-flying act.
It’s back up around $155 today.
Is Apple at $155 or just below there a “value” stock? Is it a bargain down by more than 33%?
Or, is Apple too full of worms and worth betting against?
The Death of Jack Bogle and Laying to Rest the Myth of Passive Investing
Last week, the investing world lost a man of conviction, and, for sure, contradictions – a true luminary, a pioneer, an advocate for “Mom-and-Pop” investors, a generous man, and a legend in his own time.
John Clifton Bogle, who preferred to be called Jack, died at the age of 89, leaving behind a lot.
That’s because Jack, who started The Vanguard Group, the $5.3 trillion asset management company that specializes in indexed products for passive investors, left behind an estate worth $80 million.
That’s after giving away half of his Vanguard salary for most of his working career.
But, the legend himself began criticizing the passive investing boom he’s credited with pioneering.
Whether his accumulated apprehensions and market fears will lay the myth of passive investing to rest, he won’t get to see – but we better be watching if the myth turns into a monster.
And, later, I have a special message for you about another hot topic in investing.
The U.S. Will Never Get What It Really Wants in a Trade Deal with China
Besides the U.S. and China saber-rattling over control of the South China Sea, the reason the U.S. will never get what it really wants in a trade deal is because Chinese “trade” is how China plays its foreign policy game.
And they’re very dirty players.
What the U.S. needs to get out of a trade deal is for China to stop playing dirty, which it will never do.
Real Fake News: Trade Talks with China Will Be Settled Amicably
The chances of the U.S. and China, the two biggest economies in the world and the two remaining superpowers on the planet, amicably settling the trade tiff between them are between slim and none.
Fake news that midlevel U.S. negotiators had productive meetings with their Chinese counterparts this week was just that – fake news.
That’s because something else was happening this week between the U.S. and China.
Something frightening.
The truth is there are two reasons, one insidious and one frightening, why a comprehensive trade deal will never be struck.
Next week, I’ll tell you what the Chinese have really been doing that makes an honest deal impossible.
But first, I’ll give you the frightening reason today.
It’s been brewing for years.
The Real Story Behind Credit Suisse Bankers’ Fishy $2 Billion African Fraud
Last Thursday, three former Credit Suisse bankers were arrested in London in connection with a fishing fraud aided and abetted by Mozambique government officials and other characters.
Indictments handed down by the United States District Court for the Eastern District of New York charged the bankers and their accomplices with bribery, money laundering, and securities fraud in connection with raising more than $2 billion for three suspect companies, including a tuna fishing business marketed as guaranteed by the government of Mozambique.
The companies, with proceeds from bond sales, allegedly generated cash to pay bribes and kickbacks by overpaying $713 million for equipment they bought from an accomplice.
Corporate investigations and risk consulting firm Kroll says $500 million of the money raised is missing.
More than $50 million was paid to the bankers and their cohorts in the form of kickbacks.
That doesn’t include $200 million in bank fees the conspiring borrowers paid their bank cronies.
It’s another story of greedy, loan-pushing bankers, paying bribes, getting kickbacks, canoodling with corrupt foreign heads of state and government officials, and bank compliance departments being circumvented like subway thugs jumping over turnstiles.
If Passive Investors Turn Active Expect A Crash
Back in October, JPMorgan Chase & Co. (NYSE:JPM) analysts Eduardo Lecubarri and Nishchay Dayal warned that $7.4 trillion of global assets managed in passive funds could exacerbate a rout the next recession.
They were wrong, but at the same time, they were right.
We’re not in a recession.
But, the escalating selloff is weighing heavily on passive investors, especially in the highflying big-cap stocks that led indexes and index funds higher for ten years.
That means passive investors are losing money and could turn seriously active any day now.
If that happens, a crash may not be far behind – and we’re getting close to market levels that could trigger active selling by passive investors.
The Feds Are Going After Robos – And Investors Are Getting Left Behind
The feds might be coming after the robots – finally.
Even here, as we start the New Year, I don’t have my hopes up. But I’ll take this good news.
On December 21, the SEC charged the country’s second-biggest robo-advisor, Wealthfront Advisers LLC, and a small defunct robo-adviser, Hedgable Inc., with misleading clients.
According to The Wall Street Journal, the two robo-advisors used “automated tools to create portfolios for clients, rather than relying on people to pick investments and councel customers through decisions,” misled clients by not monitoring accounts to prevent trades that created adverse tax consequences, illegally paid bloggers whose endorsements resulted in account openings, and, in the case of Hedgeable, used only 4% of client accounts to calculate company returns.
Here’s the $200 billion question (researchers at Backend Benchmarking say robo-advising makes up $200 billion of the investment and trading universe): Are do-it-yourself investors who rely on robo-advisors being shortchanged?
Today I’ll give you my answer
Plus, I’ll show you how to protect yourself.
Create Your Own Bank
How to Acquire and Store Your Physical Money of the Future By Andy Snyder, Founder, Manward Press Physical money has been with us for thousands of years. But in our most recent history, cash has become the undisputed king. The reason? It’s incredibly convenient in market transactions. Think about it. Cash is essentially […]