What Kind of Hyper-Enthusiastic Market is this that Blindly Keeps Pursuing Scams to Make a Fortune Overnight, even if They Already Crashed the First Time?

It’ll take many more sell-offs and the collapse of many more iffy stocks before this hyper-enthusiasm, after nine years of central bank nurturing, is finally wrung out of the market.

Shares of “blockchain” company LongFin (LFIN) plunged 17% today to $14.31, the sixth trading day in a row of plunges. Intraday on Friday, March 23, shares still traded at $73. The astonishing thing isn’t that they’ve plunged 81% over those six trading days, but that they had more than doubled over the prior two weeks, and that they’re still trading above penny-stock status to begin with.

LFIN started trading on December 13, following their IPO. On December 15, LongFin announced – with what I called it “a mix of gobbledygook, hype, and silliness” – that it had acquired a “Blockchain-empowered solutions provider,” namely a website that belonged to a Singapore corporation that is 95% owned by Longfin’s CEO and chairman.

Though neither the announcement nor the transaction passed the smell-test, shares skyrocketed 2,700% to an intraday high of $142.55 on December 18, giving it a market cap of $7 billion and making it the role model for a bevy of other “blockchain” companies. Then, as stock jockeys grappled with reality, shares plunged. As did the shares of other “blockchain” companies.

But then on March 12, it started all over again, when index provide FTSE Russell announced that LongFin would be added to some of its indices, including the widely-tracked Russell 2000, effective March 16:

Then all kinds of things happened.

On March 26, short-seller Citron Research tweeted: “If you are fortunate enough to get a borrow, indeed $LFIN is a pure stock scheme. @sec_enforcement should not be far behind. Filings and press releases are riddled with inaccuracies and fraud.”

That day, Russell announced that Longfin would be removed from its indices, including from the Russell 2000, effective March 28, only days after it was added to the indices.

Russell justified this one-eighty by explaining that the company had misrepresented its free float of shares. In an SEC filing published on February 13, just before the Russell US Index rank date of February 14, Longfin “confirmed that up to a maximum of 1,140,000 of the shares offered had been taken up by the public,” out of 10,000,000 offered, meaning the public held over 11%. But Russell then “determined that LongFin failed to meet the minimum 5% free float requirement as at the 14 February cut-off date.”

Now the class-action lawyers are circling.

On March 30, former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm Kahn Swick & Foti, LLC, announced that the firm has started “an investigation” into Longfin and is looking for potential plaintiffs who’d suffered losses.

Today, USMA Law Group announced that it too is investigating whether LongFin “and certain of its officers and directors violated federal securities laws.” It too is looking to represent aggrieved investors. It stated:

Throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that:

  1. Longfin had material weaknesses in its operations and internal controls that hindered the Company’s profitability ;
  2. Longfin did not meet the requirements for inclusion in Russell indices; and
  3. As a result of the foregoing, the Defendants’ public statements were materially false and misleading at all relevant times.

As a result of the fraudulent conduct alleged herein, Plaintiff and other members of the Class purchased Longfin common stock at artificially inflated prices and suffered significant losses and damages once the truth emerged

And the SEC started investigating the company for its lacking disclosures and misstatements.

Here’s what gets me…

After the first spike and crash, and after what some folks wrote about it – including your humble servant right here – it would seem that people would realize what kind of outfit this is, and that they would try to exit their shares, and be done with it, having learned a lesson about believing corporate gobbledygook instead of doing research. Then the shares would have died a quiet death in the graveyard of forgotten penny stocks.

But what kind of hyper-enthusiastic market is this that blindly keeps pursuing the latest scam, knowing all the things that are wrong with it? How can the people and algos that make up this market drive these shares so high as to give a nothing-company with the iffiest disclosures a market capitalization at one point of $7 billion? And after it crashes, how can these players in this market try to do this all over again?

These are rhetorical questions. The answer is clear: This market, despite the sell-offs here and there, including today, is still on cloud 9, with too much liquidity and over-enthusiastic gamblers trying to make their fortune overnight. And it will take many more sell-offs and the collapse of many more iffy stocks before this over-enthusiasm, after nine years of central bank nurturing, is finally wrung out of the market, and this can take many painful years.

Nothing goes to heck in a straight line. Read…  Collapse of Cryptocurrencies in Q1: Even the Biggest Crashed 67% to 88%

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  65 comments for “What Kind of Hyper-Enthusiastic Market is this that Blindly Keeps Pursuing Scams to Make a Fortune Overnight, even if They Already Crashed the First Time?

  1. Guido says:

    “over-enthusiastic gamblers trying to make their fortune overnight. ”

    Bingo. The gamblers cycle through and that may explain the deja-vu of hype.

    But then, isn’t this the cornerstone of a market lately? If I lost money trading, the next person thinks it is because I am not very bright and she is somehow immune to card games being played. Without these new sacrificial lambs, the economy will be dead.

    • RepubAnon says:

      I expect it’s pure gambling – folks betting that they can get in, make a quick buck, and get out before the inevitable collapse.

  2. michael says:

    Wolf,

    It is the same reason people run through stop signs and lights.

  3. Maximus Minimus says:

    Well before the coin mania, I had a younger colleague who had an air of know-it-all around him. He was always receiving messages what he said were investment tips. Once he tried to sell me some. I said, I will google for them, and he looked at me very scornfully thereafter. This wasn’t the first time I met this type, and explains this phenomenon best.

  4. John says:

    Really, how much of the buying is due to Ma and Pa? I would suspect the lions share is the funds buying as they simply can’t sit on the sidelines. After all, it takes 8% to make those pensions realistic and sitting on the sidelines is going backwards.

  5. van_down_by_river says:

    For those of us who lived through the previous two central bank asset bubbles it has been amazing to watch the Fed (and the other major central banks) pull out the exact same playbook involving a tsunami of easy money to fund gigantic gambling debts and obscene government spending.

    The only thing different this time is the central banks seem to have raised the stakes by an order of magnitude. Bernanke’s shenanigans left Greenspan speechless (not an easy task). He (Bernanke) appears to have an outrageous ego/arrogance and seems to really believe he saved the economy by unleashing a gusher of liquidity – as if prosperity can be conjured by entering huge numbers into various accounts.

    None of the central bankers seem the least bit concerned by any of these stories of wildly inflated prices paid for worthless “assets”, they seem to think it’s normal.

    I don’t pretend to know how this will end, but there are 7.5 billion inhabitants on the planet and most depend on a functioning monetary system to keep the economy running. If the central banks destroy the faith in the currencies what will motivate people to work? Why would central bankers risk destroying faith in the currencies? God help us all.

    • Drango says:

      It says a lot about the current state of economics as a field of study that you have to seek out websites like this to find honest criticism of the Fed. Most of the financial press are just stock market cheerleaders, and most academic economists are looking to supplement their income by renting out their opinions to whatever special interest will pay for them. Secretly funded “think tanks” are especially popular among economists.

      • janeb says:

        It won’t be long before ANY criticism of the Fed and/or the government will be banned as hate speech. Never mind the facts…they don’t matter. Welcome to the death of free speech in the West while the Left cheers on!

    • ]:) When the Indian gaming revolution came to CA people were concerned that the small percentage of people prone to gambling addiction would be exploited. (Much as alcohol exploits those with a predisposition, esp certain ethnic cultures) Central Bank policy is gambling on the macro level. It’s one thing to blame human nature (the problem isn’t guns its the people using them) and then exploit that lapse in character with economic policies (gambling). Then we get the worst of both worlds, dangerous substances and practices regulated by government agencies. I think (I hope) that bitcoin and blockchain, will replace the current global central bank authority with what could be a truly free market currency.

  6. William Smith says:

    I like that you showed a candlestick graph. If you ignore fundamentals, like most seem to be now doing, then you are going to be going purely by the charts and hype. If an “investor” sees lots of green, like in the graph you display, then it looks like a good bet (at the time). And a bet is exactly what it is. As you state, all that free money for the past 9 years has relegated fundamentals investing and boring “doing research” to the dustbin of the past.

    I might also humbly hint that saying that the “top” was $140 might be a bit misleading as we don’t (currently) know what the volume at that “top” actually was (it makes a nice 45 degree angle line though). Although technically it was the “top”, it is probable that most of the volume was done at/below the close of ~$73. Without an intraday graph (with volume) of that day we can’t be sure what was really happening. Also, was it a situation where a broker was selling to themselves in order to jack up the price? All sorts of things can be done with the price which only insiders will be privy to. There is a graph type which shows volume bars at each price point along the left axis and that might be nice to see if available.

    And since they have thrown out the book on fundamentals, this type of thing will happily continue until there is a proper crash (1929 style). Everyone is just playing the “try to pick the top” game and exit with a quick profit (as you state) just before the price crashes. The actual underlying security does not matter at all, it is the price movements they are focusing on. Since the criminals in the central banks have destroyed every other method of income except price speculation on asset inflation, welcome to the casino roller coaster of the future. Volatility is marvelous for brokers, banksters and other assorted shysters.

    I see no problem with this type of speculation happening in the stock market where it belongs: a fool and his money are soon parted. And it is such fun to watch. It is when they start playing the same games with people’s housing that I have a big problem.

    • van_down_by_river says:

      There is no “research”, “due diligence” or “homework” one can do to accurately assess the true financial health and prospects of a company. The knowledge you seek is simply not available to you – you could just as easily build a space craft to travel to Mars. You just don’t have the knowledge, resources or access required.

      People have been singing the praises of doing due diligence for years but the fact remains, for the average retail investor there is no such thing. You know nothing substantive about the companies you invest in and you can never will. Everyone is just throwing darts at a board and either getting lucky or not.

      Most populations in nature fit a bell curve. By definition the curve is filled with individuals. What separates investors on the winning side of a bell curve from the losers appears to be nothing more then dumb luck and insider access to knowledge (again dumb luck).

  7. 2banana says:

    Yellen buck looking for a place to die.

    The years of BHO insane fiscal and monetary policy is really his greatest legacy.

    ++++++++

    “And it will take many more sell-offs and the collapse of many more iffy stocks before this over-enthusiasm, after nine years of central bank nurturing, is finally wrung out of the market, and this can take many painful years.”

    • Smingles says:

      “The years of BHO insane fiscal and monetary policy is really his greatest legacy.”

      I shudder to think what will Trump’s “greatest” legacy be if you think BHO’s fiscal policies were “insane.”

  8. Jest says:

    here here

  9. b kennedy says:

    Perhaps they forgot to reset the algos?

  10. Tamara says:

    What about the algos? Could some of this, or maybe a major part of this be due to purchases driven by artificial-(dumbbell)-intelligence algorithms operating at nanosecond speeds chasing after yield at any cost, and at any level of risk. It reminds me of that old saying: ‘To err is human, but to really mess things up requires a computer.’ or the other stalwart that goes something like this: ‘Garbage In Garbage Out.’ No matter how fast a computer goes, it’s basically a dumb machine that does exactly what it’s been programmed to do, which makes one wonder about the people that design and maintain such programs (algorithms). Maybe some of them were of the mindset of ‘No pain, no gain,’ or the one that goes something like this: ‘It’s not my money, so I’ll risk it.’ Unfortunately, a computer doesn’t know any better, it does whatever it’s been programmed to do, but it does it extremely fast, and on a much grander scale. Scary when you really think about it.

    • Javert Chip says:

      Tamara

      “…Could some of this, or maybe a major part of this be due to purchases driven by artificial-(dumbbell)-intelligence algorithms operating at nanosecond speeds chasing after yield at any cost, and at any level of risk….”.

      In a word, yes.

  11. Kiers says:

    and how is amazon stock not gambling? $700Bn market cap at P/E ~300+. What, pray tell, are the assumptions in that equation?

    • andy says:

      It sells more than Facebook at $550 Billion cap, which sells more than Alibaba at $500 Billion cap, etc.

      • Ed says:

        I guess if Amazon continues to take over retail, one step at a time, its market power could get really, really big.

        Would Bezos cash in, even then?

        AWS almost seems like it happened by accident. They built it for internal use, I think, initially. In other words, I think there’s very little evidence that Bezos intends to slow down R&D and generate profits for his shareholders. Also, not a lot of evidence his shareholders are clamoring for that . . . it does seem a little bit like a game.

        • Ed says:

          (When I say “game” I guess I mean “tease”. It’s the eternal promise of future massive profits.)

        • Kent says:

          I think Bezos knows he has a major problem. If he raises prices enough to show a profit, everybody will head back to Walmart. So he has to keep the game going.

        • Reset Time says:

          If you think AMZN is generating profits I suggest you analyze their income statement. PE + 300 says it all. The company is based on a low margin business model and isn’t worthy of a PE half of what it is currently…

        • Javert Chip says:

          I disagree (but don’t own any AMZN). My view:

          Bezos consciously re-invests what would normally be net profit to continue expanding the business model (eg: cloud, warehouse automation, 3rd party sellers) & grow business volume.

          This is a real fast/crude analysis:

          o Over last 10-12 years, gross margins moved from low 20s to high 30s.

          Using 12/2017 numbers:

          o AMZN gets 8-9X inventory turns per year (Macy’s gets 4; avg grocery store gets 19). Interestingly, inventory turns have been dropping from the high-teens.

          o AMZN has $31B cash & short-term investments on the balance sheet

          o $13B of net receivables represents 26 days (which surprises me as high…with AMZN’s model, I’d expect around 5 days)

          My prejudice is Bezos could quickly convert to a lower growth model and vastly improve profits WITHOUT HAVING TO RAISE PRICES. Of course, that means AMZN days as a voracious competitor, aggressively expansion into new businesses (eg: grocery) would be over.

        • RangerOne says:

          I think this is more correct. Amazon has not yet converted into an earnings machine for it’s shareholders. They appear to still be in full growth mode.

          Making new aqquisitions and spending heavily on R&D to stay ahead of competition. And yes keep margins competative.

          I don’t know if any of that means their stock price makes sense. Maybe it does. I do believe that if they switched over to pure earnings mode they could pump out impressive profits simply because of their market share.

        • RD Blakeslee says:

          “Would Bezos cash in, even then?”

          If he did, where would he put the cash?

          In today’s world, where?

        • Smingles says:

          “Would Bezos cash in, even then? ”

          If you haven’t realized by now, it’s not about “cashing in” for the crème de la crème.

          It’s about sociopathically acquiring as many assets and as much wealth as possible before you die.

        • Michael Fiorillo says:

          Die?

          These f@#?€rs are busy thinking of ways to upload their brains onto servers, so that we’ll never be free of them…

          Awful as Carnegie and Rockefeller were, they at least built libraries and universities with their blood money; this current crop of Robber Barons just engages in a big circle jerk of eternal youth and space colonization fantasies for themselves and fellow members of the Overclass.

        • Michael Fiorillo says:

          Oh, and I should have added, while they busily herd us Prolz onto the SurveillanceNet, and buy up the remaining analog world…

      • JasonB says:

        Market caps are meaningless.

  12. KPL says:

    “That day, Russell announced that Longfin would be removed from its indices, including from the Russell 2000, effective March 28, only days after it was added to the indices.”

    As usual NO punishment. When you include and remove at will, imagine its effects on the investors. Why should Russell not be held accountable?

    “The answer is clear: This market, despite the sell-offs here and there, including today, is still on cloud 9, with too much liquidity and over-enthusiastic gamblers trying to make their fortune overnight. And it will take many more sell-offs and the collapse of many more iffy stocks before this over-enthusiasm, after nine years of central bank nurturing, is finally wrung out of the market, and this can take many painful years.”

    Yup! Same in India. Look here… (https://economictimes.indiatimes.com/wealth/invest/how-indian-equity-investors-are-reacting-to-current-stock-market-volatility/articleshow/63554375.cms?edition=828&utm_source=newsletter&utm_medium=email&utm_campaign=ETwealth)

    The people have been so conditioned today to BTFD that it is going to take a brutal fall before they wake up. Assuming of course that the central banksters allow it.

    • Javert Chip says:

      Yea, the Russell 2000 didn’t do a great job vetting Longfin. As long as it’s a non-material number of reclassifications and they are publicly disclosed, I don’t really see this as an act requiring “punishment”. It is certainly embarrassing to Russell.

      But remember, it’s the Russell 2000, not the Russell 10.

      What punishment would you consider appropriate? Death by hanging from the NYSE balcony at noon?

      • KPL says:

        @ Javert Chip,

        While I would love “Death by hanging from the NYSE balcony at noon” for the central bankers , rating agencies and regulators, in this instance a lesser punishment, for lack of due diligence in adding Longfin, along with a public apology will make me happy indeed! But then Russell is not in the business of making me happy.

        My bigger point is regulators sleep at the wheel and get away with it. This is just a smaller manifestation of it.

        • MD says:

          Regulators is gubbinment – and as we all know, gubbinment is all bad.

          Best leave it all to the financial speculators, and the industrialists who move all your productive jobs to countries wherein they can employ slaves.

          Yep – anything’s better than gubbinment.

  13. Old dog says:

    A blockchain investor is born every minute.

  14. Mike G says:

    The consensus is the whole market is rigged, and the speculators are piling in blindly thinking they’re on the inside of one scam or another.

    • Javert Chip says:

      Yup.

      This is exactly what voters voted for in 2008 & 2012. This is why elections matter.

      • Duke De Guise says:

        Yes, and let’s thank The Lord that we finally have an honest executive in the White House, who knows how to run the government like a business, understands the interplay between markets and states, and will serve the public interest!

        Oh, and what are you willing to pay for that bridge I’m selling?

        • Javert Chip says:

          The USA had bad choices – neither candidate had the right qualifications or skills.

  15. andy says:

    The market where central bankers have ‘courage to act’, i.e. gamble.

  16. raxadian says:

    I honesty wish I could blame bots for this but I can’t bots are programed by people after all.

    Don’t worry Wolf a few more rate hikes and Clould 9 will turn into rain.

    And as a wise man once said “Never underestimate the human ability to be stupid.”

    • James Levy says:

      I think they need to be validated more than they are stupid. Modern consumer capitalist society is really bad at grounding people, or giving them a sense of meaning or validation. Men seem particularly vulnerable to this condition. So they need validation. The investor class (now more and more a speculator class) need a big self-justifying excuse why they make so much more than the people who actually construct, fabricate, or assemble material things. So they take dopey risks in search of 10-bagger rewards to soothe themselves and bask in the glory of their own validation as men. This doesn’t explain everything, but I think it explains a lot more than simply labeling them stupid.

      • raxadian says:

        Don’t be sexist, women need a lot of validation too. In fact culturally they are educated to seek way more validation than men do and are also in way more social pressure.

        Ever heard about the Pink Tax?

        https://groundswell.org/ever-heard-of-the-pink-tax-4-items-women-pay-more-for/

        • James Levy says:

          Women still have childbirth as a marker of responsible adulthood, a transition ritual marking the end of childhood. They don’t all go through it, or respond to it, but it is clearly there and can be psychically validating. Men, not so much. The British refer to it as “ladism”, as in grown men acting like young lads.

    • Ed says:

      Remember that even the CEO of Citi said “we have to keep dancing”, before the recent crisis. Hard to expect more of random individuals.

      No one knows exactly when the music stops! This is true even of bonds, though the fall should be less painful than for some guy on margin or in crypto.

  17. Mugsy777 says:

    The % from a high that an index or stock retreats is irrelevant to whether it is a “buy”….a correction of ten % or a retracement of 20% is meaningless from the standpoint of “buying opportunities”… yet the talking heads refer to these as icons of opportunity to “accumulate ” stock….20% lower won’t even put you close to last years election levels where many “experts” were arguing quite reasnably stocks were overvalued….so whats the magic of a 20% retracement? ….Earnings is always the answer, and it is a con, an illusion created by share buybacks and generally accepted higher multiples based on ever unrealistic optimism about the future of the economy. Earnings haven’t gone up, just earnings per share based on fewer outstanding shares…. Multiples based on assumptions of pie in the sky economic growth are no more probable than multiples based on assumptions of a recession ……they are guesses….remember we are talking stock prices here and now, not whether Apple makes good phones or Neflix will suceed as a company 1, 5, or ten years from now…also remember the amount of debt and leverage hiding behind a curtain of bank and government duplicity will determine the price extremes on the way down just as it did on the way up…Templeton before he died predicted real estate could eventually be bought at 10% of its highs after the next crash….it turned out to be 2007….he was close and right on in some RE markets….I think thats a safe assumption about financial assets the next time the bond and stock markets collapse …wait for 10% of the highs in general…. You can always adjust higher if the situation merits….and yes “I’m no John Templeton”, but I can remember what he said and why, and I think thats enough.

  18. Dan Romig says:

    And in yesterday’s Minneapolis StarTribune business section:

    http://www.startribune.com/unitedhealth-group-dabbling-with-blockchain/478431203/

    “UnitedHealth Group is working with rival Humana to see if blockchain technology can be used to improve management of health data.”

    Perhaps blockchain technology will have a real-world application to ” … improve data accuracy, streamline administration and improve access to care.” If this does help reduce administration health care costs, more power to UHC and Humana.

    • Kent says:

      The value of the blockchain is to show that data has not been changed since it was entered, assuming you actually understand the encryption/decryption process.

      So for the blockchain to “… improve data accuracy, streamline administration and improve access to care.” there must be a current, considerable problem with claims being inadvertently modified after submittal. And blockchain technology would need to be the low-cost solution to that problem.

      As an IT guy, I can think of any number of zero cost solutions to that problem (segment claims into their own read-only tables). So, I’d be surprised if this went somewhere.

      • Javert Chip says:

        It’s interesting to hear how great blockchain is, intermixed with all the news of coin exchange thefts, many exceeding $500M. This is the very definition of “it ain’t working”.

        Anybody who believes an unknown bunch of IT guys in unknown places, doing undisclosed things with other people’s money will actually create a “store of value” are just nuts.

        An example of a functioning, real-life blockchain is the American (actually, English) real estate deed & title system (actually, property tax system). It’s been in effect in various places around the world (actually, mainly English-speaking countries) for over 500 years. Some countries (Greece, for example) don’t have it, and property transfers are a mess. Try “buying” a Greek island.

        Of course, it does come with an overwhelming amount of overhead.

        • Nick Kelly says:

          I have taught the BC Real Estate course, including the Torrens system of Land Registry (invented by Sir Richard Torrens in Australia in the !800’s) and have no idea what is supposed to be the connection to ‘block chain’ or even to computers since the Torrens system predates them by at least 150 years.

          The system is quite simple: the state keeps a registry of owner ship and guarantees the validity of a land title creating an Indefeasible Title. It no more requires a computer than a registry of births, although of course both are now stored digitally.
          Previous to this (and as you point out, still in Greece, Italy etc.) the purchaser had to be guided by the Doctrine of Notice. He had to hire a lawyer to research the title to see if was legitimate, and take notice of any claims by long- lost relatives, newly found wills etc. etc. It was a kind of caveat emptor, but applying to the title, not just the condition of the property. This process was long and expensive.

          When a Torrens system is first introduced, there will be a number of claimants saying they have been deprived of some or all title rights. The state has a fund to address this, usually from a tax on land transfers, but the overall savings are huge.
          After a few decades, claims of error fade away.
          The introduction of the system produces howls from lawyers or notaries.

          In Uruguay (without the system) the total cost of conveying a property (for cash) worth 100,000 will be several thousand, split between buyer and seller and can take weeks.
          In BC it would be much less than a thousand, including the property purchase tax, and would take a few days.

        • Javert Chip says:

          Nick

          I was making the point that the real estate system is a manual blockchain, and it has been working quite well for trillions of dollars of property for hundreds of years.

          Sorry for the confusion

        • Nick Kelly says:

          Read ya. I’m still trying to understand what BC is.

  19. Boatwright says:

    “…..this can take many painful years.” ?

    Or a couple of months when the buy on the dip money after repeated small disappointments decodes to wait a bit.

    Denial can turn to panic overnight and with asset “values” — stocks, real estate, $20,000,00 collector cars, etc. — get this inflated………….

  20. Paulo says:

    Simple solution:

    Bezos announces that _______% (or specific dollar amount on every purchase) will be donated for classroom school supplies to the following poor county schools. Other schools may apply provided they meet the _________criteria.

    This is taxation in its purest form, especially if the initial roll-in targets the states that do not have sales taxes. It spikes the guns on Trump rants. It also supports poorer parts of the country that needs help, and also (coincidentally) voted for Trump.

    It is a PR win for Bezos. It helps people in need. Plus it directs taxes towards something as opposed to supporting current admin policy of funding a burgeoning military, or cuts to other departments such as EPA, etc.

    If attacks are political, then fight back the same way, only more positive. Win win.

    regards

    • Javert Chip says:

      I dis-concur (an old wussy IBM term).

      What you’ve described is corporate charity in it’s purest form. This is not necessarily bad, but it’s not always good.

      Shareholders own the company and it’s profits. Some (perhaps lots) of shareholder might disagree about your school donations because they’d rather help pediatric cancer victims. Not to mention some companies “donate” so their wife gets on the Museum of Art’s board of directors.

      Corporation do a crappy job of determining social (not commercial) needs; politicians (not corporations) should have the cajones to determine social needs and properly tax.

  21. Jeremy says:

    This gives me an idea for a hedge fund – investing solely in scams and ponzi schemes, but using various forms of trickery to exit ahead of everybody else.

    Or maybe there’s already folks doing this…

  22. Prairies says:

    I think this year all the fun is coming to a close. Funny how interest doesn’t even go up more than 1.75% and the games end. I had to wait a few months for the 5 year charts to confirm it but look at the DOW and S&P, they boomed through 2017 – a pretty bad year for borrowing given the rate hikes were rolling in. They peaked at Jan 1 and have fallen steadily ever since, looking at short term charts looks safe until you take a step back and look at the bigger picture.

    If you want to gamble, I think there is still more room to fall. The end of the fall is when the rates stop going up by .25% – such a small amount, shows how weak the economy really is when they can’t handle the 1% bump spread over a full year.

    If it were up to me the banks would be borrowing at the same rate that they lend. They make enough money off fees, set them at prime – close to 3% on average and normalize the system. If it ends Tesla, Amazon, Youtube, Facebook then so be it. The rest of the working class is being crushed while these Tulip peddling blow hards find new ways to waste free money.

  23. Trinacria says:

    This is what happens when a large part of society lives in the theater of the absurd. 2008/09 was quickly “papered over”; people have forgotten. I have to believe this next downturn – which the various central banks have done their best to postpone – will be something else. Cryptos et al are a symptom of the deep illness. Blockchain has uses if used properly.

  24. RD Blakeslee says:

    See the movie “Ship of Fools” (1965), an allegory for a dissipating society.

  25. Wolf Richter says:

    Update April 3:

    LFIN plunged another 31% today to $9.89 after it disclosed in SEC filings that the SEC is investigating it, and started doing so on March 5, and that LongFin has practically no accounting controls because it “lacks qualified personnel who fully understand GAAP reporting requirements,” and that therefore any financial disclosures it does make are pure BS.

    It may not have anyone in the US that understands anything.

    Since the perps are living in Singapore, and not in the US, no one will go to jail.

    This was one of the easiest stock scams to detect out there. I still have no idea why people went for it, except on the time-honored principle that any scam is a good scam as long as it makes you money.

    • MF says:

      When anything goes and nothing matters all across the culture, how does one differentiate between scams?

      Here’s what I find interesting: how does the class action plaintiff intend to prove fraud in a business environment where fraud is BAU? Snap cravenly offered no-rights “securities” to ravenous “investors” who snapped them up. Uber? Air BnB? Tesla? All of it stinks to high heaven, yet gets devoured as if it’s the last M&M in a Ukrainian orphanage.

      Even the supposedly pedestrian act of buying a house is all scam and swindle now. Buyers sign one pile of forms advising them of their rights and protections, and another pile waiving them.

      I could go on, but I don’t want to go too far off topic.

    • MD says:

      Human beings will always fall for GRQ schemes – Isaac Newton was a pretty bright bloke but he lost his shirt during the South Sea Company bubble bust.

      Greed is by a country mile the most powerful emotion – which is why if you want a stable society you need strong controls to rein it in.

      Jimmy Carter warned of the dangers of greed in his 1979 ‘malaise’ TV address – and was laughed out of office. Rampant greed and self-interest was the order of the day by 1980.

      Oh well – ya makes ya choices! And here you are.

      Strangely surprised at people jumping into GRQ schemes, even when GRQ via speculation is systemic!

  26. Aussie says:

    What type of Investor would invest in this market? US Federal Reserve with the co-ordination of BIS and other World Banks! Been watching the bond market lately? Someone tried buying all the Bonds being sold just couple of days ago, but alas, they couldn’t stop the free-fall, so what do you think they did? They also started buying up STOCKS, and also IPO’s, just to make it look well, you know, authentic!
    NO ONE ELSE WOULD BE STUPID ENOUGH TO DO THIS WITH THEIR OWN MONEY!!!

  27. Pl'n'l says:

    The Fed owns it all now. It’s inflate or die.

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