BlackRock: Short The Bubble Stock

Yesterday BlackRock reported second quarter earnings that narrowly missed estimates. BlackRock is the largest money manger.It has $ 5.6 trillion under management.They are now experiencing a kind of being of victim of their own success syndrome. ETF's a.k.a. known as exchange traded funds are getting a bigger share of new inflows by eager stock market investors. Problem is that ETF's have much lower management fee. Hence the shortfall in earnings. Hence the squeeze in profitability. Chairman and President of BlackRock Larry Fink simultaneously with the earnings miss release announced his firm would switch to more use of artificial intelligence when picking stocks.Larry praised AI. But he also stated that the headcount at BlackRock would be the same next year as it is today.In other words AI's supposed market expertise is secondary. Lopping heads is the real reason so to combat profit squeeze.Actually AI is more expensive than monkeys throwing darts at a stock page which has been proven to be a better performer than pros picking stocks.In 1973 Princeton University professor Burton Malkiel wrote " Random Walk Down Wall Street" . In the book Malkiel states " A blind folded monkey throwing darts at a financial newspapers stock page could select a portfolio that would do just as well as one carefully selected by experts."Actually the underlying metaphysics of that result was the fact that there were more smaller capitalization stocks on the page than large ones. Consequently the smaller stocks would probably do better over the long run. Bottom line is that BlackRock is an expensive stock. It's market cap is six times sales. It also trades at 2.50 times its book value. It yields 2.50 percent. But its stock trades at $423.00 per share. So a 3% loss on the stock rubs out the dividend return but what's going to happen to the 420.00 left over? I'm short BlackRock. It's the perfect bubble stock in a bubble market.

Children Of Fiat Money

Starting with George W. Bush and continuing through Barack Obama's second term the U.S. will have approximately 16 years of federal deficits of about $1 trillion per year. That's well into a full generation of an unreal economic heretofore never experienced by any generation of peoples in recorded history. Before this time people created value and wealth the old fashioned way. They worked and saved. Now congress and the executive along with judicial activism mandate money be created to support the brave new world of equality. Equality before the law and increasingly equality in results. We had deficits before. But on a much smaller scale. Notably the Lyndon Johnson presidency. At that time Johnson and Congress funded the Viet Nam War and an expansion of entitlements without regard to how they were to be paid. Two people raised in that poorly thought out period were the same George W. Bush and the same Barack Obama. They saw. They experienced. They copied. Hence the mess we are in today.

 What will the sixteen years and counting experience of $ 1 trillion deficits coupled with $ 1 trillion Federal Reserve  purchases of government securities do to young and immature minds who are forming a basis of approaching life? Will G.W. Bush and B. Obama look frugal in comparison?

One thing for sure. Afghanistan will not change as much compared to what the U.S. will experience in difference in the coming years..

Buy Gold & Silver or Buy Gun ?

Recently the University of Texas Investment Management Co. converted its gold futures holdings into physical bullion worth about $1 billion. The fund has 20.7 tons of gold stored in a New York vault. Bruce Zimmerman, chief investment officer of the $26 billion fund said, " It's a very conservative hedge against some low probability scenarios, such as the debasement of a major currency." He's not alone. In 2010, total physical investment in gold bullion soared 66% to 880 metric tons. That's also almost mostly stored in New York vaults.

Assuming that no one has tunneled into the the gold vault and it is still there next week and the worse happens. What's Bruce to do? Bruce is in Texas and the gold is in New York. Can Bruce handle 20.7 metric tons of gold? Does he have a truck? Who will help him pack the gold? What will the help charge? Where will they take the gold? Who will be in business to accept gold? What will they charge? Will vendors of food and services respect Bruce? Does Bruce own a gun?

Financial assets are a lot different than physical assets. One can have billions of financial assets in a drawer whereas thousands in gold or silver needs a lot more care in storage. Mega wealth in dominations of gold and silver needs massive security precautions. And in the end relies on the honor of all involved. That need for "honor" is a tall order. In the future guns are a better investment for personal security than attracting threats to ones personal security by lugging gold or silver around.

Turn Off Bubble Machine

The money -making-monkeys at the Federal reserve mentioned today that they have not ruled out further quantatative easings after this half-trillion tranche runs out in June. Lawrence Welk had a champagne bubble machine. Ben Bernanke has his very own bubble-making machine also.

Turn off Ben's bubble machine.

Obama Talks To Gates & Buffett

Today President Obama summoned Bill Gates and Warren Buffett to the Oval Office. Barry wants their input on how the government could be more effective and get the economy going again. Do you think that Bill or Warren would say," It's this way Barry. There are far too many affirmative action employees in government. And that includes you Mr. President. Your mere presence calls into question how serious Americans are in dealing with problems. Let's face it Bar, you ain't got it. And another thing,  stop appointing Jews to every open slot that comes up. It gives the impression that you buy into their 'chosen people'  bullshit or that you are on the take".

Probably wont happen. But wouldn't it be a fun and a breath of fresh air?

Waiting on Fed Equals Waiting for Gadot

Samuel Beckett's "Waiting for Gadot" is a classic "Theater of Absurd" example. America's waiting for more federal reserve help and more government stimulus is equally absurd. It's moronic to wait for politicians and technocrats to create jobs and wealth. They are leeches and charlatans who usurped our economys vitality for their own purposes. If people want something done, then they will have to do themselves. I good first step would be to shut down Washington by all means.

Stock Market Crash Unfolding Now

The stock market fell 323 Dow Jones points today. It was reacting to a terrible May unemployment report. The tally of private sector jobs was a mere 41,000. It was expected to be in the 125-250 thousand range. There is no way thye U.S. can grow out of this recession with those kind of employment gains. Consequently we will crash. Maybe revisit the market lows of last year. That would be an additional 3000 points lower from this level.

Obama, Pelosi, Reid et al who passed a costly health care reform but can't pass a necessary financial markets reform will be long remembered as two important reasons for the crash. Simply Americans have lost faith in their central government. And who can blame them.

Machines Run Wall Street Trading

Examining recent volatile charts on Dow Jones and one gets the impression that only nano- second trading machines could leave such foot prints. From down 300 points yesterday to up 100 today without any improvement in fundamental facts that are eating away at the economic base of global business. I.E. the continuing meltdown in financial instruments and institutions. It's safe to say that more and more people who are engaged in the market are not sure what they own or what they are short- trading's the thing. Rather it's their machines trading that's the thing. It's really not trading but a video intimidation stock trading game that's aided by massive amounts of liquidity untethered to real economic events until they are. And then look out.

Money & Music & Bubbles

The spending monkeys in Congress in pursuit of reelection and mission creep passed the Federal Reserve Act Of 1913. The goal of the Act was "... to provide a ready reserve of liguid assets in case of financial panics". The term "liquid assets" was a clue to the intended or unintended consequences of the Act-I.E. BUBBLES FORM FROM LIQUIDS.

Interestingly in 1919 the song " I'm Forever Blowing Bubbles" was composed by Jaan Kenbrown and John Kellette.
Partially, it went like this:

"Im forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams they fade and die"

In 1958 Stan Freberg composed a send-up of Lawrence Welk. The song was titled " Wunerful, Wunerful".

The song ended with this phrase:

"Help! Help! Wunerful,Wunerful
turn off the bubble machine. Help! Help!"

Monkeys shouldn't use money. It has the disastrous effect of multplying their greedy traits.