Friday, April 3, 2015

A great example of how Wall st keeps the sheeple guessing.

Here is wisdom for those who can pull themselves out of the herd and look upon it from afar and in an emotionally detached way: what easier group of people to con than a herding collective?  All you have to do is con a few of the leaders of the group and the rest of the group is infected via standard herding communications mechanisms.  And what better way to con the smarter ones than to use sophistry and double talk?  
  • Quick tangent: Society often uses that term, "emotionally detached" in the pejorative.  Makes sense, right?  If you are not one with the herd then something is wrong with you.  You must be emotionally swayed, errrr, controllable, by herd think or maybe you need to see a shrink.  Of course, I believe that just the opposite is true.  People go through life having no clue what is going on and not even an inkling that they should care.  They are one with the herd and they feel warm and safe because of it.  I wish them luck with that because they will certainly need it when the collapse hits.
In any case, here is a good example of an unnecessarily complex bunch of bullshit from none other than Mohammand El-Erian of PIMCO fame.  After all, when you are in charge of many hundreds of billions of dollars of other people's money, you better come off as very super sharp and insightful lest record fund outflows continue to reduce your relevancy in the world of economics.

Below is the last paragraph of that article with my comments interspersed:

With long-term strategic positioning in mind, investors also need to take a more tactical approach to managing their exposures in relation to their fundamentally-based strategic portfolios. Borrowers should do the same when issuing new bonds.
[tactical is the new normal for all investors because the market pricing mechanism has been so badly distorted by fed intervention.  Anyone who is not prepared to bail out of their "long term" strategy on a moment's notice will eventually end up holding an empty paper bag.]

Today, this means recognizing that EM is in a technical phase of unsettling volatility. It also means that individual components of the asset class will tend to trade cheaply relative to intrinsic values.
[Rough translation: EM asset prices have come down a lot lately.]

Meanwhile, investor attitudes will tend to be overly influenced by news, for better and worse, from a few big markets (Brazil and Russia come to mind) as well as by the impact of advanced country central banks on the flow of tourist capital.
[El-Erian's explanation of Wall St pump and dump sounds very elite and technical, do you not agree?]

Solid markets will at times be contaminated by the broader trends, even when their fundamentals are good.
[El-Erian agrees with me that fundamentals don't really matter to the short term asset prices.]

And the temptation to purchase the EM asset class via passive benchmarks will negate some important fundamental differentiation that is sure to emerge down the road and become an important contributor to superior performance.
[El-Erian agrees with my long standing views that true fundamentals are unknown and unknowable, so using them as guides in buying and selling is a losing game.]

Of course, my EW models indicate that BRICs are about to catch a bid and so, once the prices are pumped up again, El-Erian will be back with another article talking about what a "great value" the BRIC ETFs are.  Mark my words, it will happen and the reason I bother to point this out to my readers is so they begin to realize that these guys either don't know jack shit or they are purposely playing a role in confusing and misleading people who actually think that free advice from a Wall St. person has any value to you.  My advice is that if you don't know who the patsy is in a Vegas gambling scam, it's you.

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