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Gundlach Explains Why The Market Hasn't Crashed Yet: "People Are Holding And Hoping"
One week ago, after Carl Icahn joined the legion of doomsayers launched in mid-September by none other than the former "balls to the wall" bull David Tepper, we wondered who would be next:
But what does Tepper think? ICAHN SAYS 'IN MY MIND, IT IS TIME TO BE CAUTIOUS ABOUT THE U.S. STOCK MARKETS'
— zerohedge (@zerohedge) July 10, 2014
On Friday we got the answer, when none other than the ascendant "Bond King", Jeff Gundlach, whose Doubleline Capital just recorded its 20th consecutive month of inflows (contrasting with 29 straight months of outflows for former bond Goliath Pimco) became the latest to join the dark side when shortly after an abysmal payrolls report, he warned that the U.S. equity market as well as other risk markets including high-yield "junk" bonds face another round of selling pressure.
While perhaps not as dire in his outlook as Icahn, Gundlach explained why far from the correction being over, the market still has a long way to go. He told Reuters that "the reason the markets aren't going lower is people are holding and hoping," Gundlach told Reuters in a telephone interview that "the market bottoms out when people are selling and sold out – not when they are holding and hoping. I don't think you've seen real selling in risk assets broadly. Markets need buying to go up and they need volume to go up. They can fall just on gravity."
So after taking a its biggest step lower since 2011 in the past month, why has the selling in the S&P500 stalled? Because, well, hope may not be a strategy but now with the Fed's credibility rapidly evaporating, it is all investors have, or as Gundlach puts it: "The reason the markets aren't going lower is people are holding and hoping." Incidentally, there is a reason why hope is not a strategy: in the end, it always fails.
It's not just stocks that Gundlach is bearish on: he is also not a big fan of junk bonds. "I'll think about buying when it stops going down every single day."
And speaking of the implosion in junk bonds, JPM confirmed as much on Friday when it looked at the latest ICI quarterly worldwide data for Q2'15 which showed that HY ETFs, which have increased sharply their dominance in the HY space over the past five years, just experienced their largest drawdown ever over the past few months. Since May 2015, 16% (or $6,6bn) of the AUM of HY ETFs was redeemed, which is 1.4x larger than the previous major drawdown of July 2014.
In other words, while investors may be terrified of wholesale sales in stocks just yet over fears such selling will launch a feedback loops where selling begets even more selling, they have no such qualms about junk bonds, which on Friday continued their selloff despite the biggest equity short-squeeze on record.
What does this mean for the big picture?
Back to Gundlach again, whose Los Angeles-based DoubleLine was overseeing $81 billion in assets under management as of the end of the third quarter, said: "Clearly what's happening is people are waking up to the idea that global growth is not what they thought it was."
Gundlach's damning observation on the current state of the world would make him a worth entrant into the "conspiracy theory tinfoil blog hall of fame": "People are acting like everything is great. Junk bonds are at a four-year low. Emerging markets are at a six-year low and commodities are at a multi-year low - same level as in 1995 ... GDP is not growing at a nominal basis."
Even International Monetary Fund Managing Director Christine Lagarde affirmed this, Gundlach said: "You talk about an important moment – when somebody who is traditionally a cheerleader for a bright future says, 'I have to downgrade my global growth forecast,' as Lagarde did."
It gets worse: Gundlach, who has maintained since May that the Federal Reserve will not raise rates at all this year, said the environment feels similar to 2007's, when a financial crisis was brewing.
"People want them (Fed officials) to increase because they think it is a signal that everything is secretly OK. If the Fed raises rates, that means everything is OK. But it is the other way around. If the Fed raises rates against this backdrop, it just makes things worse."
Gundlach's closing observation: "There's going to be another wave down in risk assets and it's happening globally."
Adding it all up: Tepper, Icahn and now Gundlach; not to mention a brutalized hedge fund world which just saw its worst 2 month stretch since Lehman. Oh yes, and Yellen who also several months ago said stocks are overvalued.
Aside from that, just BTFD, because some central bank, somewhere, will surely come to your rescue...
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You gotta know when to hold them, but now is the time to fold them.
It is also time to run, run to buy gold and silver, that is.
… The reason the markets aren't going lower is people are holding and hoping
Just like with diarrhea, people are holding and hoping. ;-)
Looney
As shown here ALL assets are expensive compared to what I consider the most important metric, income, except SILVER.
"""""Just like with diarrhea, people are holding and hoping.""""""
Diarrhea is hereditary it runs in your jeens
Well, hodling my bitcoin still works.
China's Ghost Theme Parks:
http://www.latimes.com/business/la-fi-china-theme-parks-20151003-story.html
When I was there at a different park I visited one huge park [which was fabulously beautiful!] and I only saw two other couples in the entire park all day. Creepy.
Gundlach, Tepper, Cramer - I get all these blokes confused. After a couple of CNBC appearances, they all begin to look and sound the same.
Racist cocksucker still don't believe in hope and change.
Long live jew bankster cock!
The "market" players today are akin to Wile E. Coyote hanging from a rope over a cliff with each fragile strand snapping before his eyes. They all must know inside that a tumultuous plummet is on the horizon. Mbeep! Mbeep!
The markets will crash and come back again. Then they'll crash and come back again. Then they'll crash and come back again. Wash, rinse, repeat.
Is the word that "buy and hold" is the algor HFTs are running with? Shit, humans can do that (maybe).
Amazing! We live in a moment of history where HFT machine are doing the buy and hold two step.
They are all singing the same song…
https://youtu.be/doIEwzc6k_k
https://www.youtube.com/watch?v=kqXek853SDE
Help me OB Wan Cannabis, you’re my only hope.. for change.
Instead you get OB ummer CanDo,
Keep holdiong and hoping, yes, we can!
Hoping...hop in...hop i...hop.
Hop.
Just re-think what these mean:
No Hope. No Jobs. No Cash. All dead. And only (Innoculum-Thorium) Gates left. Hummmm.
I just downloaded the full load in my jean.
It's the greatest threat global security has ever faced. EMP ATTACK!
All the weapons in the world won't matter once this small army kick into gear!
http://motivationdose.com/electromagnetic-pulse-attack-emp-blackout-usa-...
It's the greatest threat global security has ever faced. EMP ATTACK!
All the weapons in the world won't matter once this small army kick into gear!
http://motivationdose.com/electromagnetic-pulse-attack-emp-blackout-usa-...
Does the word "hod-ling" mean "loosing your shirt"?
Well it is close to EOY. Maybe dey look to coax a tad of "capital loss" to enhance what they already getting in the form of IRS subsidies.
Tube heads be talking de problem is corparate tax rates - but never tell us what the actual rate. Go back to 2010. Ge reported 26 Billion in profits, and pays negative 4 Billion in tax. Is the FED head also the 'el hefe" at the IRS. I mean negative tax rates for fat plunderers like GE who engineer the Fukiama reacter get subsididized for off soring jobs, and sharing a bunch of patents owned by the American commons with the techno heads in the countries we pay GE, and others, to go to and kill jobs back here.
I dont mind Corps being People, as along as People can be Corps.
When SHTF, buy toilet paper
Venezuela
Loon,
That is just fucking gross.
But I'll see you and raise you,
The truth is the Fed Fucks are holding the markets diarrhea in the retail trader's anal cavity with quantitative ass fucking.
The Source
Hope is rotten thighed whore.
"Incidentally, there is a reason why hope is not a strategy: in the end, it always fails."
Unfortunately the American voter didn't learn that lesson before the boy came along promising hope and change.
And then immediately stocked his cabinet with long time DC insiders! Fooled ya!!!!!! Fucking Sheep Idiots!
This time they will pull the Trump (Perot) card. Because that worked so fucking magnificently in '92.
They are laughing at you!
real credit/FX risks, slow ni global growth, china collaspe, 3 rd quarter earnings within a few weeks....yea its all upside. a 2% 10 year swap rate is overhanging the market.
Old fashioned coot, ain't he?
“People are holding and hoping… ”
They’ve been doing THAT for 7+ years! (Actually, I believe since 1987, when the Wizard of Greenspan was able to stave off a depression after THAT crash)
Have you noticed ever since then, “The Future” has had sort of a squishy feel about it -- the DVD rose and fell, the Space Age is now “Amateur Hour”, the PC has slowly petered out, Japan, Inc. deflated, China leveraged its billion “worker-ants” to the breaking point. The only things that actually GROW are healthcare, government, and smartphones for sending each other selfies and “kitty-videos”, arranging sex encounters, drug deals and to buy and sell ETFs.
The term “Progress” is almost extinct and when it is used, it’s generally sarcastically. Earthlings are now convinced that the source of salvation for their troubled lives and only hope for the future is Big Brother, and HE’S the one who’s twisting the rules and lying the lies necessary to keep the casino open, despite the conflagration burning it to the ground.
Unless you consider the Steve Jobs / Mark Zuckerberg / Elon Musk / Jack Ma / Richard Branson / Tim Cook model of “Celebrity Entrepreneur” to be a healthy, practical source of economic leadership, I can’t see anybody winning.
After the debris is cleared and the NEW casino, under NEW management is up and running, I’ll re-enter the human race.
(But my sell-by date is looming!)
"Sell by date"...thanks for the laugh I needed it tonight.
Nobodys hoping shit.
There is simply no alternative investment vehicle. The FED has destroyed them all.
the market hasn't crashed because christmas is around the corner.
Oh, and that delightful new Seth Rogen Christmas movie.
http://www.youtube.com/watch?v=9eDN-l8-ZDw
What happens in February?
This guy is way off. Most people have left the stock market. Just look at 9/30, 10/1 and 10/2 Dow Jones of this past week and you will see BIG drops on the open and then a few hours of support and then the 1:00 "buy-in" to bring the index back to where it started. This is Federal Reserve Bank support. It is so clear it is actually funny. People are not holding out hope! The stock market is now a Broadway show.
I agree, QE4 has already started. Just hasn't been announced yet.
The rest of my 401 k will have left the market before the end of the 4th quarter, and not in a good way.
Bullshit. There is no public market. It is the Fed Fuck's market now, Droogies.
We all know the Fed Fucks, through market manipulators (pick one) are stair stepping their 'markets' down vs. permiting an uncontrolled crash.
We all know that the Fed Fucks are using manipulated government statistics to show weaker economic health to help throttle the equities markets down.This gives the Fed Fucks an escape from raising interest rates and further sinking this moribund economy into a deeper recession, or worse. We all know the Fed Fucks do not want to be blamed for another recession or mismanagement of the economy, again... They also know they do not have 100% control either. And this is what keeps the Fed Fucks awake at night. The sooner we exposed these fucks and the fact that there are no public markets, and drive the public to losing all faith in the Fed's markets, the sooner we will take the Fed Fucks out of the game and get back to capital markets normalcy. Off with their fucking heads already!I upvoted you for the phrase "Fed Fucks" which I hadn't heard used before. Less centralization of everything is a key avenue out of our problems. The richest counties in the US all surround DC. It's Rome all over again.
+100 Agree. Love the "Fed Fucks."
I upvoted you because you are correct. They are slowly manipulating markets lower and imarkets go lower go too fast they mention some bullshit about QE or some other lie like that "mistake" on their web site regarding a september rate hike.
I'm retired now but where I worked the 401k money went into a retirement fund that invested in a fund that invested in several other funds such as Blackrock. It takes a while for all of that to unwind. Most of the people I worked with did not even watch the market like I did. They would say it doesn't matter because they aren't going to retire for several years. There are very few people who invest their own money on their own and watch the market to keep track of what their investment is doing. Most of the market is hedge funds, banks, HFT traders and of course the Fed. It isn't really a market anymore. All of my money is in a credit union waiting for negative rates to drain it away.
"Why The Market Hasn't Crashed Yet"because you fucking rigged it on black monday
here i saved a screenshot from august of nasdaq
http://s14.postimg.org/gbip7a47x/fwawfawf.png
$15 Whoppers all around, I'm buying
...thanks but I'll have the diarrhea instead...
...thanks but I'll have the diarrhea instead...
...thanks but I'll have the diarrhea instead...
...thanks but I'll have the diarrhea instead...
...thanks but I'll have the diarrhea instead...
apologies but I'm having problems with a plugin
I really do not like diarrhea that much...
Fat finger
Hope is the most masochistic feeling there is.
Hope and pray, do nothing to make anything happen, cease action, sit back, and let the bankers rob your pockets.
The coming Christmas season is going to be horrendous for retail. In my work I can already see the momentum winding down before it even really got started. That's not to say that there won't be a Christmas rush. Of course there will be--there always is. But in YoY terms it's going to be rather muted, which will put retailers in pretty bad shape going forward.
Regarding the stock market, I think Gundlach's line about global growth "not being what we thought it was" is just about perfect, even if a bit on the obvious side. I'm not sure how anybody can think that there is any long term, fundamental upside to stocks given the oncoming demographic situation. As the Baby Boomers start to retire en masse, they will need to start liquidating their portfolios, pensions, 401ks, and real estate. This will put massive selling pressure on every single asset class, and these assets are going to be sold to...who exactly? Nobody else has the money to buy this stuff at its present bubble-icious valuations; not younger generations, not wealthy foreigners, not even the Federal Reserve. That means prices are going down big time.
My advice to the Boomers is, he who liquidates first liquidates best. You don't want to get caught in the rush for the very narrow exit windows when the selling really starts.
I agree a weak Christmas year. Much do to the fact that Christmas is on a Friday this year. Thus no extra weekend to shop and most folks will be working Mon to Thursday.
My advice to the Boomers is, he who liquidates first liquidates best. You don't want to get caught in the rush for the very narrow exit windows when the selling really starts."
Precisely.
And I'm uncertain just how long they have, either. I'm not in any racket, but extended family is, and they have really started to pay attention, too. Trouble is, they're either stuck in multi-year leases of their other shacks, or else, they really don't want to cope with the downsizing dance liquidating to smaller quarters would entail. Hopefully, they'll get on board before others do, because when the unwind starts...
Same with the upcoming 401k disaster. That's gonna be awful to watch.
I also wouldn't expect much in the way of holiday retail either. And that's IF we manage to get there first.
As with 2008, the unwind starts when a critical number "get it", regardless what the rackets are doing.
m
the single family real estate is the biggest problem - the propertytaxes are a killer going forward coupled with medicial insurance increases there isnt a lot of flexibility to stay in RE assets
its going to be a deluge
You have summed up the Boomers problem perfectly. Antiques and all those collectibles? We Boomers want to unload some of this stuff, we ain't takin' it with us, if you know what I mean. Might as well convert it to cash.
Alas, the Millenials, et al don't have the money or the interest in this junk. There is no support for the values, this stuff is cheap and going to get cheaper, like worthless. There's going to be a lot of things gone begging for a bid.
FORWARD OLD SOVIETS!
March 10th 2008 Bear Stearns implosion occured in Q1. October 4th 2015 Q4 brings us up to 31 [count em' Legarde you douchebag money whore] successive quarterly CONTRACTIONS you dumb fucking money slut. Furthermore, the long term longitudinal probability of 'growth' is
NON F U C K I N G EXISTENT, you old whore!
Note: Every CB announcement maintains the trend. Get with the programme or GET OUT OF MY WAY because this absolutely fucked up fifty ways to Sunday Central Banking nightmare is going to implode within hours, and the Central Bankers could not stop this if their lives depended on it.
Up yours, Wall Street, IMF, World Bank, and Bank for International Settlements.
So who's buying everytime the Dow touches near 16,000. Five times this has happened and five times someone has saved the day. Could it be the Fed has been buying even as they claim not to be? Futures at 3:03 pm EST this sunday up 187. Proof once again bad news or bad jobs report means no rate hike and a bounce for the market.
http://www.cnbc.com/pre-markets/
Futures markets are not open yet...
the fed e-mini mart, open 24 hours a day, 7 days a week for their convenience. free coffee, donuts, blow and hookers
Rahim always keeps the coffee station spotless!
The tax donkeys have nothing but hope, since they have been corralled into defined contribution plans for "retirement".
""the reason the markets aren't going lower is people are holding and hoping,"; wrong the FED has forced all investors into risky behavior and it will end badly for many; just a matter of time and we are closer with each passing day.
Funny how none of these "guest" guru's speak about "FED & minions corruption" as part of their analysis. Because they are afraid of losing their jobs and rightly so. Guess that is not part of the analysis?
"analysis"
You mis-pronounce the word, it's Anal-y-sis.
Asshole commentators.
That should 'splain it!
In other news, most of the major health insurers have announced they will not be paying claims for ER visits classified as "suicide watch".
Kill yourself and fight it out with the life insurers. We are outta here!!!!!!
What a load of crap... Unless he spells "hope" P P T.
What's to stop the Federal Reserve from buying stocks directly through their primary dealer banks?
Stealth QE4 ?
That +500 point market reversal on Friday proves my theory. No way that was all humans doing legitimate buying based on the bad jobs numbers. We are seeing more and more of these insane buying shoots. I think it's the Fed.
Audit the Fed !!!!
What about that fake CIA Federal Reserve Bank trading out of Belgium that everyone knows about?
You know the one that buys all the treasury bonds to keep up the grand illusion that everything is normal
^^...
I bet they are buy all the STAWKS.
China was found to be behind the UST buying out of Belgium.
China is selling USTs to themselves?
Circle jerks are getting more jerkier and more circlier apparently.
The left hand doesn't know what the right is doing...
Oh wait, they know !?
All in the flow...
and what do you call double-, or triple-triangular debts?
Markets need buying to go up and they need volume to go up...
He fucking can't be serious. He just can't be.
1) there is no market
2) the 6 year melt up has been on low volume
3) gravity has been repealed
This is what the market needs.
Thatguybloke The Bankers Song
How many people do you know that own any meaningful amount of stock?
Currently these are my holdings:
200 Shares of XCO
150 Shares of HK
50 Shares SD
100 Shares ROYL
700 Shares HTM
(going to buy some shares of XIN probably monday for fun if funds clear)
Purely played and held "for fun" on my Robinhood account .... you know for trading on the toilet, I figure if I am taking a shit, I might as well trade some of it aswell.
I dont think anyone is holding and hoping , and if anyone is holding and hoping they are a bank or institution not an individual, most of the relevant stocks (Blue Chip Dino Stocks) are like 80% institution owned at this point.... no one cares if these stocks crash and burn except the mega banks.
Market volume is terrible, the only thing keeping the flash crashes at bay are the algos trading between themselves to keep up the facade that the shares they are hoarding and cant sell (because no one is buying) are still worth something.
Gundlach Explains Why The Market Hasn't Crashed Yet: "People Are Holding And Hoping"
Or is the FED holding the market up through surrogates, such as All In Abe?
Remember, when the DOW tanked in October 2014, Bullard said that the FED shouldn't end QE. The DOW jumped to a new all time high. When Japan then picked up the QE mantle, along with promises from Draghi, Bullard then changed his tune and said QE should end and he was misunderstood in his October comment.
You people here seem clueless. His comments are f***ing new? Ninety-five MILLION people in the U.S. were in the markets a few months back. Okay now it is now to ninety-four million. LMAO. People are totally conditioned to have ‘faith in Fed’. Bad news has ALWAYS meant another Fed rescue. So, as soon as more bad news arrived, talk went from a tiny hike to more QE by the end of the year. The economy is now 100% dependent upon debt. Low rates and loose credit have kept the lemmings buying cars and houses and boats and toys. Any tightening or “austerity”, means instant doom.
If people see the markets tank, they will get scared and stop borrowing and buying, then it gets ugly in a negative feedback loop. There is no other way forward now…keep kicking the can until the day it all collapses. They will fight the bears all the way down, more stocks buybacks, talk of QE4,5, and 6, and more stimulus. If this gets away from them, the cities all burn.
I know of NO ONE who has yet gotten scared and sold their stocks…they ALL have limitless faith in Fed and nowhere else to get rich quick.
Hope is a powerfull force not to mock.
Remember, it's what drivers stackers and what wins wars.
Holding on Tulip and Bulb frenze craze under qualitative expense. (Quantitative Easing).
These idiots are a riot. Bang, bang. How will the cartel live on?
Dependency theory http://m.youtube.com/watch?v=RoMLdFlta1ETulips for UN Agenda 21. What a irony.
"If you buy a security to sell it to a greater fool, if no greater fools left, then you are the greater fool"
Seth Klarman
I dont expect market crash. The main reason is that EVERYBODY expects something bad happen this fall. Do you seriosly believe they will allow this ?? It is all rigged. Crash can only happen when nearly NOBODY expects it to happen.
Well, to be fair, many people in 07-08 got filthy rich betting on a market crash so your "NOBODY" theory is tits up in the toilet. Jesse Livermore made a fortune in 29, Michael Burry, Charles Ledley and Jaime Mai to name a few in 08, Kyle Bass anyone? and obviously not "EVERYBODY" expects something bad to happen this fall, go listen to EVERY major financial news outlet and you hear quite the opposite.
Besides, you are not the market and pension funds, corporate 401's have no choice, (well they do but they won't) but to be long.
Considering the MULTIPLE claims on single assets (there is only one chair) rehypothocation and paper gold once things get going it will be all air under this bitch and the central banks will be helpless to stop it. Now that is just the stock market, the bond market is the 600 pound gorilla in the phone booth. (you probably are too young to remember those)
I'm not sure about that. If everybody is edging towards the exit in anticipation of someone shouting "fire", someone shouting fire is likely to trigger the expected response.
Perception in a large enough group becomes reality for them, if not for everyone else.
Saudi cuts Oil price again for Asian clients following on Iran and Iraq.
Should make the financial bond market go weak around the knees !
The system is so interlinked now precisely by the QE/ZIRP free money that the Casino doesn't know where to place its bets!
Real economy vs Financial economy now in a lose/lose spiral. I love the terminology here : Brutalized HF world.
Ha, ha the robbers of 2/20 being taken to the cleaners.
No inflation, no debt writeoff moar government spend all to maintain a precarious equilibrium of debt servicing or government subsidies.
Jet stream ignores the west coast. Keep up the UN bullshit. You created your bed, lay in it. We better create a water loss to create a super computer chip. New illegal low paying jobs in Silicon Valley.
Semiconductor Production 101 - From Sand To Processors
I don't trust JP Morgan. I don't trust Carl Icahn. I don't trust Goldman Sachs and I don't trust articles that are written under the Tyler Durden by-line. This is not because these sources do not provide valuable information. It is just that the information they provide is not necessarily what i get out of it.
Take this article for instance. The banks have the power to move price any way they want. However, it seems that the banks are begging joe middle-class to be the bad guy in a market crash and to not recognize that the entire ramp up and any potential ramp down is 100% a product of banker manipulation... with the help of media and other cronies.
Just as I believe that the US government is a separate and unaccountable entity from the American people. I believe that the banks and the financial propaganda networks are entities separate and apart from the American people.
They want it blamed on a black swan or the people. But really the banks are the drivers and controllers behind everything financial. Nothing happens by accident. The game is rigged. It is false. It is fraud (IMHO .. and observance of the trends and media).
"Separate and unaccountable". -- pretty much nails it.
As I read the articles about events going on in regards to Iran / Iraq / KSA / Yemen / Syria / The Middle East in general, and think back to ca. 2011 -2013, and how with all of this turmoil there and oil is still well under $75 bbl, either we were seriously played for what we had paid for commodities, or we are entering the mother of all recessions / depressions.
This article from 2011, laid it all out four years ago how things have been playing out.
http://www.pragcap.com/the-financial-crisis-of-2015/
http://www.businessinsider.com/the-financial-crisis-of-2015-2011-1
End the Fed
Sing with me on this tune: Strangers in The Night https://www.youtube.com/watch?v=hlSbSKNk9f0 Deflation is in the air, ta da da da da ….. Tou bi dou di dou, ….
See for Deflation http://forum.prisonplanet.com/index.php?topic=80429.msg1557239#msg1557239
And when deflation is in the air QE is never far away. So don't worry NIRP stays and ZIRP and QE4 are coming so that companies can cheaply lend and buy more of their stocks back while the FED will help to pump up the stock market.
Market thoughts:
http://thetradingcrucible.blogspot.com/
Some of you might remember this during the ripe mom calling you by a dog whistle. No cell phones except Fudgepacking Hollywood advertising a phone that was bigger then the faggot using it.
Edward Bernays is a fucked up nephew of sigmund freud. The rest of the PR advertising crew love to sleep with their mom
Same people elected Obama.
Hold this!
Still stacking.
Gundlach is exactly like Icahn.
In one breath they say "we are going much lower" but what they are actually doing is buying hand-over-fist.
For just 1 example:
Icahn releases a video, aptly titled "Danger Ahead" https://www.youtube.com/watch?v=ZyKIvnied-o
In this video Icahn states the world is falling apart and one should run for the hills.
What Carl Icahn actually does:
Buys: LNG, CHK, RIG, etc etc etc
Fuck these people. Why anyone listens to them I'll never know.
....and with Gundlach so bearish I'm sure he's completely divested from his MBS and ABS holdings right? Wrong....he's ADDED.
In 1906 the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair in which 800 people entered. Galton, being the kind of man he was, ran statistical tests on the numbers. He discovered that the average guess was extremely close to the weight of the ox.
This story was told by James Surowiecki, in his entertaining book, The Wisdom of Crowds.
Not many people know the events that followed. A few years later, the scales seemed to become less reliable. Repairs would be expensive, but the fair organiser had a brilliant idea. Since attendees were so good at guessing the weight of an ox, it was unnecessary to repair the scales. The organiser would simply ask everyone to guess the weight, and take the average of their estimates.
A new problem emerged, however. Once weight-guessing competitions became the rage, some participants tried to cheat. They even tried to get privileged information from the farmer who bred the ox. But there was fear that, if some people had an edge, others would be reluctant to enter the weight-guessing competition.
With few entrants, you could not rely on the wisdom of crowds. The process of weight discovery would be damaged.
So strict regulatory rules were introduced. The farmer was asked to prepare three-monthly bulletins on the development of his ox. These bulletins were posted on the door of the market for everyone to read.
If the farmer gave his friends any other information about the beast, that information was also to be posted on the market door. And anyone who entered the competition who had knowledge about the ox that was not available to the world at large would be expelled from the market. In this way the integrity of the weight-guessing process would be maintained.
Professional analysts scrutinised the contents of these regulatory announcements and advised their clients on their implications. They wined and dined farmers; but once the farmers were required to be careful about the information they disclosed, these lunches became less useful. Some smarter analysts realised that understanding the nutrition and health of the ox wasn’t that useful anyway.
Since the ox was no longer being weighed — what mattered were the guesses of the bystanders — the key to success lay not in correctly assessing the weight of the ox but in correctly assessing what others would guess.
Or what other people would guess others would guess. And so on...
Some people — such as old Farmer Buffett — claimed that the results of this process were more and more divorced from the realities of oxrearing. But he was ignored. True, Farmer Buffett’s beasts did appear healthy and well fed, and his finances ever more prosperous; but he was a countryman who didn’t really understand how markets work.
International bodies were established to define the rules for assessing the weight of the ox. There were two competing standards — generally accepted ox-weighing principles, and international ox-weighing standards. But both agreed on one fundamental principle, which followed from the need to eliminate the role of subjective assessment by any individual. The weight of the ox was officially defined as the average of everyone’s guesses.
One difficulty was that sometimes there were few or even no guesses of the weight of the ox.
But that problem was soon overcome. Mathematicians from the University of Chicago developed models from which it was possible to estimate what, if there had actually been many guesses as to the weight of the ox, the average of these guesses would have been. No knowledge of animal husbandry was required, only a powerful computer.
By this time, there was a large industry of professional weight-guessers, organisers of weight-guessing competitions and advisers helping people to refine their guesses. Some people suggested that it might be cheaper to repair the scales, but they were derided: why go back to relying on the judgment of a single auctioneer when you could benefit from the aggregated wisdom of so many clever people?
And then the ox died. Amid all this activity, no one had remembered to feed it.
Extracted from Other People’s Money — Masters of the Universe or Servants of the People? by John Kay, Profile Books
An interesting fable for our benighted times.
Thanks for shaing, Arthur.
"All human achievement has the same origin, identically. Imagination is a force of nature. Is this not enough to make a person full of ecstasy? Imagination, imagination, imagination. It converts to actual. It sustains, it alters, it redeems!" -- Saul Bellow, Pulitzer Prize winner.
OX-ish !
WOW, THIS GUY IS AMAZING. HE CALLED THE MINI CRASH! CHECK IT OUT .
https://www.sentimenttiming.com/antoemang/19
Tell us when to expect the next "black hole"; then we might believe you...cheers.
I'm no seer but I really think a whole lot of people are going to lose a lot of that hope this week.
America needs to up their standing amid falling credibility, they need to go big or go home. My guess is that they will blow off their other foot and blame it on Iran
how do you lose faith when you don't have any?
"Bernanke: More execs should have faced prosecution for 2008 crisis"
Former Federal Reserve Chairman Ben Bernanke said in a newspaper interview published on Sunday that more corporate executives should have been prosecuted for their actions leading up to the 2008 financial crisis.
Bernanke told USA Today that the U.S. Justice Department and other law enforcement agencies focused on investigating or indicting financial firms.
"But it would have been my preference to have more investigation of individual action, since obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm," Bernanke was quoted as saying.
Bernanke, who presided over the U.S. central bank during the financial crisis considered the worst since the Great Depression, said it was not up to him to decide whether to prosecute individuals, noting: "The Fed is not a law-enforcement agency."
"The Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms," Bernanke added. "Now a financial firm is of course a legal fiction; it's not a person. You can't put a financial firm in jail."
Bernanke, who retired from the Fed last year after eight years as chairman, said of the financial crisis: "I think there was a reasonably good chance that, barring stabilization of the financial system, that we could have gone into a 1930s-style depression."
In the interview, Bernanke, whose memoir is being published this week, acknowledged that analysts were slow to realize how serious the economic downturn would become and faulted himself for not doing more to explain why it was in the public's interest to rescue the financial firms that helped cause the crisis.
"Every time I saw a bumper sticker which said, 'Where's my bailout?' it hurt," the newspaper quoted him as saying.
http://www.reuters.com/article/2015/10/04/us-bernanke-financialcrisis-id...
?_?
"Faulted himself for not doing more to explain why it was in the public's interest?"
Since when did that SOB ever have any interest in the public's interest?
Does he practice what he preaches?
People are holding bags of poop that smell like poop and pretending that the smell isn't a poop smell.
Its always nice when pundits make firm predictions. Harry Dent's is DOW to 14-15k by end of October, followed by a leg up, then another slide down in the new year. Though I've yet to see his prediction of $750 gold arrive.
Well, I'd take a harry dent over a bald protrusion any day.
Federal Reserve pet rocks rejuvenate liquidity.
MZM is at an all time low; something like $13.7 trillion.
The "market" will eventually crash so that the owners of the last 3 major banks that are left can tell the FED to print 150 billion a year (QE4) for 2 years. This of course will be spun as trying to save "main street", and jobs. The majority of money will be to buy back the S&P @ 800, and the next shitshow will happen all over again, and the consolidation that was in place circa 1900 can continue. My guess would be next year in or just before October. Right before the next Election.
Reminds me of Obummer's Hope and Change
Does everyone have such a naïve simplistic view of the market as this guy? He actually makes money offering his foolish opinions? Markets don't move because people decide not to hold stocks for the simple reason that the same amount of stocks are always held because when somebody sells somebody else is obviously buying. This is the same naïve garbage we hear when a "expert" tells us how much money is on the sidelines. If I buy $100 worth of XYZ stock and take my hundred dollars "off the sidelines" LOL, somebody else obviously has my hundred dollars and that money is still on the sidelines! I swear we live in the dark ages still.
After 1 year Ebola has disappeared in the news.
I agree with Gundlach 100%. But what about all that stuff they said was in his desk drawer?
The market is a simple thing. It takes a while, before the majority of players understand their positions and then things start happening exponentially.
The stock markets are being held up by central banks with printed money.
Technicals suggest its going higher... just sayin'
Technicals? LOL.
"People want them (Fed officials) to increase because they think it is a signal that everything is secretly OK. If the Fed raises rates, that means everything is OK. But it is the other way around. If the Fed raises rates against this backdrop, it just makes things worse."
This is it. Even though it makes it "worse" as far as the Fed point of view, they need the "window dressing " to show that they are confident that they are in control.