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8.26.2018 - Free Financial Newsletter Bookmark

Watch What You Broadcast
 
The other day I wrote an article showing that there’s been a very big surge in concealed weapons permits across the nation. In a big way, that makes me happy since law abiding Concealed carry people tend to be the most law abiding folks one can find.
 
But, there’s a disturbing trend that I do want to speak about, because the affects of this trend are NOT good.

 
As you know, the police and even your employer, will often go through a person’s social media posts, to see if there’s anything in them that can raise a red flag. We’ve seen this a lot lately, as people go through old twitter and facebook and Instagram postings, looking for dirt on people they don’t like.
 
Well, as in most things, there’s good and bad. For instance, you might be a person that is pro marijuana, and you make that case on your social media pages. Okay, it’s free speech, and you’re not breaking the law, so that’s your right. But then you find out that you were turned down for your new job prospect, because that company does NOT believe in legal weed.
 
There’s an old saying that suggests “Never say anything on social media that you wouldn’t say to your own mother” and that’s exactly the reason. If you post up any sort of hate speech, racism, homophobia, etc, that can and will come back to bite you in the butt at some point, if someone’s determined to screw with your life.
 
Granted, some people are just plain stupid. You can’t imagine the number of knuckleheads that have been arrested because they decided to post the loot they got from stealing someone’s stuff. You have to have the IQ of a clam to actually rob the corner liquor store, and then post on your facebook page pictures of the cash and booze you got. Yet it happens every day.
 
One of my favorites, was these brain surgeons:

Ashville, Ohio - A couple was busted for allegedly robbing a bank after posting photos of their loot to Facebook, according to a police report.
John Mogan, 28, and his girlfriend Ashley Duboe, 24, were charged with robbery for the heist at the Savings Bank in Ashville, Ohio on August 24.

Mogan allegedly walked into the bank wearing a hooded sweatshirt and gave the teller a note demanding cash, and the teller did as told.
Police say that four days after the robbery, the couple posed together with cash in their hands. On August 31, Mogan also posted images of him posing with a wad of cash in his mouth.
 
Now most people would think that it’s pretty easy to see how stupid posting something like that is on Facebook. It is, and it’s good fodder for laughing at them. But, very few people consider the consequences of posting something that they’re passionate about, that can land them in very serious trouble, despite their posts being perfectly acceptable.
 
What I’m talking about is concealed carry people.
 
Think about this for a minute. You’re a perfectly legal gun owner. You have a carry permit and a perfect background. But because you were at the wrong place at the wrong time, you had to use your weapon to defend yourself. As I’ve told you over the years, no matter what, there’s going to be police and arrests, and legal issues ANY time you have to use a defensive weapon. Our system is completely “bass ackwards” concerning this. Instead of praising you for removing a scumbag from the gene pool, they will indeed try and prove you murdered someone.

Prosecutors will try and push for penalties. They’ll come up with a lot of standard malarkey, such as “Mr. Jones life really wasn’t in danger, and Mr. Jones could have complied with Mr. Smith, he didn’t need to shoot him”. They’ll look for every reason to paint YOU as the bad guy in these situations. It’s disgusting, but it’s real. Think I’m exaggerating?

 Check this:

In January of last year, the NYPD arrested a 17 year old for allegedly threatening police officers after he posted the emoji of a gun pointing at the emoji of a policeman. In March, a Virginia woman was arrested after she posted a picture of herself holding a gun on Facebook. “Be careful what you put on the internet,” she said at the time. “Because you can go to jail for it. Facebook thugging is a crime.”
 
If they’re going to arrest someone for an emoji, imagine their orgasm in going after someone that’s actually had to shoot someone.
 
 
Well folks, please don’t give the young aggressive Prosecutor any help! They’re going to go through your facebook and twitter pages. They’ll examine everything about you. And what do you think they’re going to tell the jury?
 
Suppose you’re simply a 2nd amendment fanatic, who’s got all the macho, he-man photo’s of your tricked out AR-15 all over facebook. You’ve got the T-shirt that says “shoot first ask questions later”. You have “I’d rather be carried by 6 than judged by 12” twitter posts. You’ve posted video’s of the latest greatest weapons, some of which are laser engraved with “the punisher” on them.
 
They find a conversation you’ve had via Facebook, where you’re discussing the stopping power of the new XYZ cartridges. They find your bumper sticker with the age old “kill em all and let God sort em out”.   You get the picture.
 
What do you think the prosecutor is going to show and tell the jury? He’s going to tell them that this wasn’t “just” a defensive shooting. He’s going to tell them that you’ve been waiting all your life for the right instance to shoot someone. You’re a ruthless killer, fascinated with the idea of taking a life. He’ll have 8X10 color glossies of all your weapons photo’s, and all your pro-gun rants. He’ll tell the jury that “no normal person without an evil agenda would wear this shirt!” and he’ll whip out the “shoot first ask questions later” T-shirt.
 
I’m sure you see my point. As much as I’m proud of the weapons I might own, I do not post photos of them. I don’t like social media to start with, and rarely ever use it, but if I did, you can bet I’d never post up anything that some hotshot prosecutor could stick me with. It’s one thing to maybe show that you’re pro gun, but to give them any ammunition ( pun intended) is just wrong.
 
So please folks, please. If you’re a gun owner, or a concealed carry person, don’t broadcast stupid things that could one day bite you. No bumper stickers, no funny shirts, and especially NOTHING ON SOCIAL MEDIA.

Even the most harmless and mundane thing you can think of, could/would be thrown in your face in the event you’ve had a deadly encounter. In North Carolina, a prosecutor trying to pin charges on a guy that had to shoot someone, put up a picture of the guy and his 12 year old daughter at the range. It was a harmless post, a proud dad with a photo of his daughter learning marksmanship. He told the jury, “and he’s not afraid to train his innocent child in the skill of killing people”.
 
Yeah, it’s that bad. Don’t do it.
 
The Market:
 
Well, they did it. While it’s NO secret that I didn’t think they’d pull it off, they have. We set a new all-time high on the S&P. How they’re getting it there, and the reasons behind it, are a bit convoluted, but as I’m fond of saying “up is up” and we went up.
 
Now it’s do or die time. I’ve been suggesting that there’s 3 ways this can go, and 2 of them are still in play. The first was that we flirt and flirt with the all-time highs, but we don’t get through and the market fades back down.
 
Well, that’s sort of still in play. While the S&P did make a new high, it only did it by a point. So even the smallest of gap down opens on Monday, would put us below the high again. It might take 3, 4 5 more of those type events to hold up.
 
The second scenario, is that the S&P makes it to new highs, stays above those highs and then starts another leg higher, pushing the DOW back up and over its highs, and the whole market just soars to new heights.
 
The third scenario is the most scary. In this one, the market surges to new highs, but only for a couple days/week, and then “like magic” the rug gets pulled and we start a long pronounced drop of 20% or more.
 
Now I realize that door number 3 isn’t popular, consider just how and why we’ve gotten here. TRILLIONS in Central bank money. A trillion in stock buy backs, paid for by companies issuing debt! Or, consider the interesting case of the Russell 2000.
 
I’m in the IWM which is the ETF proxy trading vehicle for the Russell. It’s doing well. In fact, it just put in an all-time high. Yet as Simon Black has mentioned recently, 60% of the corporate debt issued by the 2000 companies in that index are rated as JUNK. What sort of voodoo is that??
 
How can you have 2000 companies in an index that just hit the highest level in the history of the index, and yet 60% of the debt they’ve issued is junk, meaning at risk of default??
 
Yet that is indeed the type of things this “bull” market is based on. Central bank money printed from thin air, companies issuing debt to raise money to buy up their own shares, and more than half of the debt is junk rated.
 
These are the types of reasons I don’t sleep well at night. Is this sustainable? I guess it is, until it’s not. When is that? Today? Tomorrow? Next week? In 3 years? I don’t know.
 
Remember the old saying “it’s different this time” and everyone laughs, because it’s really never different? Well this time there’s no laughing. This IS different. Never before in human history have the Central banks of the world worked this closely together to keep the global economies up. Never before in human history were interest rates “negative”. Never before have CB’s bought equities by the billions, never before have stock buy backs been so plentiful.
 
For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation. But since 1982, when they were essentially legalized by the SEC, buybacks have become perhaps the most popular financial engineering tool in the C-Suite tool shed. And it’s obvious why Wall Street loves them: Buying back company stock can inflate a company’s share price and boost its earnings per share - metrics that often guide lucrative executive bonuses.
 
As Reuters wrote recently, “Stock buybacks enrich the bosses even when business sags.”
 
Yes folks, stock buy backs were illegal for decades. Now they’re not. Is that not different?? Central bankers always said they “had the ability” to purchase equities, but never really did it. Now they own billions. Is that not different? And, since before 82, companies didn’t issue debt to raise cash to buy up their own stock because it was illegal, and now they do by the billions, is that not different? It most certainly is.
 
This is why any logical thinking person is struggling with this market. As long as the banks keep printing, and the CB’s keep buying equities, and interest rates remain at manipulated low levels, and companies keep issuing junk debt, and use that cash to buy up their own stock...then it’s apparent this can keep going. It’s worked for the last ten years, why not 10 more?
 
See the dilemma here? As long as nothing goes bump in the night, they can keep blowing this bubble to grotesque proportions ( they already have, take a look at the CAPE ratio) But doesn’t history tell us that bubbles pop, nothing grows to the moon, and all bull markets meet their bear? Indeed.
 
One day this will end. I honestly have no clue when. But I suspect that it will be an event so violent that all their band aids, bailing wire, and twist ties won’t be able to fix it, and ALL of the excess will get wrung out of this market like never seen before.
 
Right now we’re staring at the 3 doors. Break out and soar, fade out right here, or break out for a short period and roll back down. I don’t know which one is going to open.
 
I’m long IWM and ROKU. Just those two in the short term trading account. If we clearly break out, we’ll add more. But that said, until you see it happen, be careful. Doors 2 and 3 could be painful!

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