Warning: The Smart Money Is Fleeing US Stocks

The Dow dropped 180 points yesterday — or about 1%.

And another clever billionaire says he is looking elsewhere for profits. Reuters reports:

Activist investor Carl Icahn on Monday said there was a chance the stock market could suffer a big decline, saying valuations are rich and earnings at many companies are fueled more by low borrowing costs than management’s efforts to boost results.

“I am very cautious on equities today. This market could easily have a big drop,” Icahn said.

Yes, dear reader, the smart money is getting out of US stocks. And here’s our old friend Rob Marstrand explaining why:

Right now, every measure that analyzes the S&P 500 says it’s expensive. Prices are high relative to earnings, net assets, sales, and cash flow.

What’s more, there’s plenty of evidence that the main thing propping up the stock prices is heavy buying by the companies themselves [via share repurchases].

And now, that prop is getting kicked out from under the stock market. Bloomberg reports:

After snapping up trillions of dollars of their own stock in a five-year shopping binge that dwarfed every other buyer, U.S. companies from Apple Inc. to IBM Corp. just put on the brakes.

Announced repurchases dropped 38% to $244 billion in the last four months, the biggest decline since 2009…

Pareto’s ‘foxes’

Although the bull market in US stocks is probably near its end, the bull market in the Deep State shows no sign of weakening.

Year after year, the power of the ‘foxes’ grows.

It was the great Italian economist Vilfredo Pareto who noticed — among other things — that no matter what kind of government you think you have, there are always some crafty insiders, the ‘foxes’, who take control of it.

Policies are set, programs are started…decisions are made…with no consent of the people or their elected officials; the foxes work the angles.

Over time, the forces of law and order become more and more corrupt…as the foxes bend the entire system to do their bidding.

Wars are started with no plan or intention to win them. Money is handed out for no better reason than this: they can get away with it.

And best of all, most people are none the wiser; they believe the myths…and attack anyone who challenges them.


Perhaps the biggest rip-off of all time has taken place over the last eight years — and in plain sight of everybody.

Via the magic of ultra-low rates, the Fed — a nest for the wiliest and most cunning of the foxes — took roughly $8 trillion out of the pockets of savers and retirees and handed it to borrowers.

Who is the world’s biggest borrower?

Yes…it’s the Deep State itself.

The Fed claimed to be helping to ‘stimulate’ the economy. But you can’t really stimulate an economy by stealing from the people who produce wealth and provide it with capital.

Not surprisingly, growth has stalled. Wages have fallen. Productivity has stagnated.

For 95% of the male population, real earnings are lower today than they were in 1973.

Is there any wonder many of these men vote for Donald Trump — a ‘strong man’ who promises to do something about it?

But the top 5% — where the foxes are — gained income. Their wages are up more than 50% over the same time.


Because they take more and more money from the rest of us.

More tomorrow…on a new Rebellion in Gualfin…and a measure of how big the Deep State has become…


Bill Bonner,
For Markets and Money, Australia

From the Archives…

We Are Losing the Ability to Think for Ourselves

By Vern Gowdie | May 18, 2016

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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