{"id":53672,"date":"2020-06-14T06:35:20","date_gmt":"2020-06-14T11:35:20","guid":{"rendered":"https:\/\/olduvai.ca\/?p=53672"},"modified":"2020-06-14T06:35:22","modified_gmt":"2020-06-14T11:35:22","slug":"trash-stock-speculation-signals-dangerous-trend","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=53672","title":{"rendered":"\u201cTrash Stock\u201d Speculation Signals Dangerous Trend"},"content":{"rendered":"\n

\u201cTrash Stock\u201d Speculation Signals Dangerous Trend<\/a><\/h3>\n\n\n\n
\"trash
Photo by\u00a0Wikipedia.org\u00a0<\/a>|\u00a0CC BY<\/a>\u00a0| Photoshopped<\/figcaption><\/figure>\n\n\n\n

Last year\u2019s\u00a0yield curve inversion<\/a>\u00a0and\u00a0repo market<\/a>\u00a0troubles are both longer term signals for the end of a market cycle.<\/p>\n\n\n\n

While not perfect, we can add an increase in \u201ctrash stock\u201d speculation as another potential signal for the peak of the market cycle.<\/p>\n\n\n\n

That signal may have arrived, according to ZeroHedge<\/a>:<\/p>\n\n\n\n

In nearly every market cycle, speculation in low-quality, virtually valueless and literally bankrupt stocks, marks a market top.<\/p><\/blockquote>\n\n\n\n

This brings into question the Dow\u2019s recovery that began in late March, which has humbled<\/a> Stanley Druckenmiller:<\/p>\n\n\n\n

That Fed stimulus, combined with investor excitement about the gradual reopening of U.S. business, is leading to broad outperformance among those stocks hit the hardest in March\u2026 He added that the technical momentum the market has right now, what he called \u201cbreadth thrust,\u201d could carry equities even higher.<\/p><\/blockquote>\n\n\n\n

The Fed stimulus pumped trillions into the markets. Investor excitement can inflate stock prices. Reopening businesses can spark more optimism.<\/p>\n\n\n\n

However, if Doug Kass at Seabreeze Partners is correct, he may be seeing through the hubris. In a recent piece<\/a>, he directed attention toward another fact:<\/p>\n\n\n\n

If you look carefully at the Nasdaq\u2026 you would be surprised to see how many stocks have underperformed \u2013 as a handful of large stocks coupled with a group of speculative (but valueless) equities<\/strong> have been carrying the weight of the Average.<\/p><\/blockquote>\n\n\n\n

It\u2019s those \u201ctrash stocks\u201d that have the potential to take the wind out of the market recovery and the overall cycle. And this wouldn\u2019t be the first time this has happened.<\/p>\n\n\n\n

The 1999-2002 \u201cdot-com boom\u201d is the most recent such instance<\/a>, filled with examples of overvalued \u201ctrash stocks\u201d that eventually left investors hanging.<\/p>\n\n\n\n

Which leads us to today\u2026<\/p>\n\n\n\n

Those Who Fail to Learn From History Are Doomed to Repeat It<\/strong><\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cTrash Stock\u201d Speculation Signals Dangerous Trend Last year\u2019s\u00a0yield curve inversion\u00a0and\u00a0repo market\u00a0troubles are both longer term signals for the end of a market cycle. While not perfect, we can add an increase in \u201ctrash stock\u201d speculation as another potential signal for the peak of the market cycle. That signal may have arrived, according to ZeroHedge: In nearly […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,303,29887],"class_list":["post-53672","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-fed","tag-trash-stocks"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=53672"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53672\/revisions"}],"predecessor-version":[{"id":53673,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53672\/revisions\/53673"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=53672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=53672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=53672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}