Ugly Week for Stocks: Bad Sign that Even the WSJ’s Mega-Effort to Reflate them Fizzled

FANGMAN down 10.4% for the week, down $1.12 trillion from peak. Apple plunges.

This week was ugly for stocks in its own right, but it was particularly ugly because there was a major – and briefly very successful – effort by the Wall Street Journal to manipulate share prices higher. Tuesday was a bad day. Wednesday the stock market was closed. And Thursday just before noon, the Dow was already down over 700 points. It was time to pull out the big guns, namely the WSJ citing unnamed Fed “officials.”

“Federal Reserve officials are considering whether to signal a new wait-and-see approach after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year,” it wrote.

The market – algos most of it – responded instantly, and stocks performed a miraculous recovery. At 11:25 AM, the Dow was down to 24,259. It closed the day at 24,947, having rallied nearly 700 points based on this story. WSJ even took credit for the rebound:

“The rebound accelerated late in the session after The Wall Street Journal reported on the Fed’s evolving thinking on rates,” it wrote. “The blue-chip index ended down 79.40 points, or 0.32%, to 24947.67, and the S&P 500 lost 4.11 points, or 0.15%, to 2695.95.”

That was on Thursday. But on Friday, the whole thing came unglued again – and for the FANGMAN stocks – Facebook, Amazon, Netflix, Google’s parent Alphabet, Microsoft, Apple, and NVIDIA – in a particularly ugly way.

  • The Dow fell 2.24% on Friday to 24,388, ending the week down 4.5%. It’s down 9.5% from its peak, but down only 1.3% so far this year, and flat year-over-year.
  • The S&P 500 fell 2.3% on Friday to 2,633, ending the week down 4.6%. It’s down 10.5% from its peak, down 1.5% year-to-date, and down 0.7% from a year ago.
  • The Nasdaq fell 3.05% on Friday to 6,969, ending the week down 4.9%. It’s down 14.3% from its peak, but remains up 1% year-to-date and is up 1.9% from a year ago.
  • The Russell 2000 small caps index fell 1.98% on Friday, ending the week down 5.6%. It’s down 16.9% from the peak, down 5.7% year-to-date, and down 4.8% from a year ago.

So in the bigger scheme of things, this sell-off is just a minor ripple. Wall Street crybabies are acting like it’s the end of the world, and they want the Fed to back off, obviously, because stocks should only go up, and by a lot, every single year, for all times to come, and when they refuse to do that, it’s a cruel abnormality.

There have been a number of efforts to manipulate stocks up. They all worked briefly, then collapsed. This includes the “dovish” interpretation of what Fed chief Jerome Powell had said, which had caused a huge rally. And it includes efforts to boost individual stocks, such as when famed short-seller Citron Research changed sides, and tried to boost the shares of Nvidia on November 20, with a tweet. The shares rallied wildly, but this week, shares began to drop again and on Friday plunged 6.7% to $147.61. They are now up only 1.6% from the close of the day before Citron Research made that infamous tweet.

The FANGMAN stocks are now in a peculiar position. Their combined market cap had once upon a time – namely August 31 – been $4.63 trillion. It has since plunged by 22.4%, or by $1.037 trillion, an astounding loss for just seven stocks. Friday was outright bloody for Apple, Nvidia, and Netflix:

  • Facebook [FB]: $137.42 (-1.6%)
  • Google [GOOG]: $1,036.58 (-3.0%)
  • Amazon [AMZN]: $1,629.13 (-4.1%)
  • Apple [AAPL]: $168.49 (-6.3%)
  • Microsoft [MSFT]: $104.82 (-4.0%)
  • Nvidia [NVDA]: $147.61 (-6.7%)
  • Netflix [NFLX]: $265.14 (-6.27%)

Their combined market cap dropped 3.7% today, giving up $137 billion. For the week, they plunged $419 billion, or 10.4%. And they’re down 22.4%, or a feather-ruffling $1.04 trillion, from their combined market cap peak on August 31:

Apple, once the $1.12-trillion company that was walking on water on October 2, has since plunged 32.5%. In terms of dollars, its market cap was slashed by $364 billion to $755.8 billion, now below Amazon and Microsoft.

The FANGMAN stocks as a whole dipped into the red year-to-date on Friday. So from that perspective, this $1.034 trillion that disappeared since August 31 isn’t anything to write home about – these stocks being down just a smidgen for the year, a harmless form of easy-come, easy-go. It’s not like it can’t get a whole lot worse. 
 

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  98 comments for “Ugly Week for Stocks: Bad Sign that Even the WSJ’s Mega-Effort to Reflate them Fizzled

  1. Iamafan
    Dec 7, 2018 at 7:37 pm

    It was ugly for those buying long term Treasuries, too. The shorter term bills did okay though. The 4 week auctioned twice this week and the latter one was great.

    • Geoff Fulks
      Dec 7, 2018 at 10:08 pm

      Hmm, the etf TLT has done really well lately…

      • Iamafan
        Dec 8, 2018 at 3:21 am

        -5.9 for a year is bad, right.
        The 12 mo. Dividend at 2.7 is like the yield of the 52 week without the loss on principal.
        That said I’m not an ishare fan or an etf either. I like to hold the underlying directly.

        • Geoff Fulks
          Dec 9, 2018 at 3:04 pm

          Agreed. Since the article was about an ugly week, I was commenting on the short term. I bought TLT a month ago. I do agree that treasury direct is a better option.

  2. Rowen
    Dec 7, 2018 at 7:50 pm

    But wait, FB announced on a Friday evening that it was adding 9B to its stock buyback program.

    Has to be rats exiting a sinking ship and grabbing the cash via private transactions.

    • MC01
      Dec 8, 2018 at 10:58 am

      Truth to be told FaceBook’s problems go beyond the mere vagaries of financial markets: the company has been involved in so many corporate scandals they make everybody else look good bar perhaps Deutsche Bank.
      FB is the second worst performing member of the FANGMAN, down over 37% from its peak: only Nvidia has fared worse so far.
      It means the company’s Teflon™ coating is starting to wear thin and the only way to reapply it is by the use of copious amounts of cash for buybacks.

      From a strictly economic point of view holding FB stocks makes more sense than Netflix because at least FB is a highly profitable company instead of a black hole where cash just disappears, but given what we keep on learning about FB and how Mr Zuckerberg (de facto owner and boss) keeps on thumbing his nose at legislators and regulators the company will land in serious troubles. It’s only a matter of when.
      Then all the buybacks in the world and even the most enthusiastic stock market rally won’t be enough to save shareholders.

      • Rowen
        Dec 8, 2018 at 3:56 pm

        Because of the timing of this buyback (Friday after-market), I don’t think this SBB was for shareholders at large. It was a regulatory requirement so that insiders can cash out their FB stock without having to liquidate in the market. Got to exit the ship before Zuck manages to screw up this situation any worse.

        If I were a non-insider FB shareholder, this announcement would scare the bejeesus out of me.

      • Nick
        Dec 10, 2018 at 3:40 pm

        I have much more use for NetFlix than FB. FB is such a joke. I’m not sure why NetFlix is struggling so much. The only other competitors are who? Hulu? Amazon Prime? Neither of those IMO hold a candle to NetFlix. I really enjoy a lot of the NF original series, cartoons for my kids etc. Amazon is good or better in its own right but NF is obviously cheaper. I’d pay twice what I pay in order to use Netflix. It provides real value. If they ever got the option to release or rent/buy new releases like Amazon they could kiss all the other players good bye!

        The bigger question is who are the dumb chits going to be holding the Tesla bag when that boondoggle of a company goes teets up.

        • chartsmaster
          Dec 11, 2018 at 9:16 am

          A while back, I too thought it was only a matter of time before Tesla ended up out of cash. I now believe that they will arrange a financing deal with Apple. Probably not an outright sale, just exchange of technology and Apple becoming a significant minority owner.

  3. Old Engineer
    Dec 7, 2018 at 7:50 pm

    I don’t think things are too bad. As I have predicted, it sounds from the news like the Fed is throwing in the towel on raising rates. That will get the stock prices back up. Nothing else will. It will also solve the inverted curve problem. After all, none of them will be around when it all blows up.

    • kafka
      Dec 8, 2018 at 1:52 am

      I think just rate hold will not help .. even lower interest rate will not stop disasterous collapse, only zero interest and direct QE will help.
      According to my experience, it will be 1200 of NASDAQ :P.

      FED is slow animal..

    • Tim
      Dec 8, 2018 at 3:05 am

      Sure, budyy, straight to the moon!

    • Prairies
      Dec 8, 2018 at 10:25 am

      Wrong. Rates are not the main cause of the down turn. Rates went up all of last year and the market did nothing but climb. The market grew beyond what human production can support, lay offs or stopping rate hikes won’t stop this correction.

      • Old Engineer
        Dec 8, 2018 at 12:28 pm

        Prairies,
        You are right. But I don’t think that will stop the corporations and the politicians from putting the heat on the feds. And it is going to take a lot of courage for them to stand fast as the stock market plunges and the clamor grows.
        And I don’t think QE or zero interest rates will help because as you say the problem is with the bottom 75% who don’t get any benefit from these.

        • Prairies
          Dec 8, 2018 at 2:59 pm

          I have a feeling that going back to QE won’t fix this. PE firms were tanking profitable businesses during 0% interest years, now you add the trade war with a business owner being arrested outside of American jurisdiction. This domino effect is going to turn into a snowball effect, society can afford to lose bad business models but I don’t see anyone trying to implement legitimate replacements.

        • Rowen
          Dec 8, 2018 at 3:59 pm

          Assets prices were able to reach astronomic levels because personal/business debt papered over the production/wage deficiency. Eventually, this debt has to be delevered. The issue is how it gets done.

          The deleveraging process is WAY beyond the Fed’s ability to engineer a landing. It will require a political solution, since one person’s debt has to be matched to another’s assets.

    • Gershon
      Dec 8, 2018 at 10:40 am

      As I have predicted, it sounds from the news like the Fed is throwing in the towel on raising rates.

      If the Fed throws in the towel on interest rate normalization, it will destroy the last of its already shredded credibility. In addition, that kind of panicky move will further expose the foundations of sand our vaunted “economic recovery” – a chimera and a fraud based solely on QE and the accompanying debt and credit binge that has created the illusion of recovery while setting the stage for a far more devastating and systemic financial crisis.

    • Gershon
      Dec 8, 2018 at 10:42 am

      I don’t think things are too bad.

      I think you are absolutely right, sir. You should go all in on these doomed Ponzi markets. Let us know how that works out for you.

  4. Ehawk
    Dec 7, 2018 at 8:09 pm

    What’s the big deal? I don’t see anything worthy of flash news. Come on these stocks have been going Up, Up, Up since 2011 or so, facebook a few years after later when it IPO, but.

    This 10% is nothing. Wake me up if 40-50% happens.

    No gonna happen, Rates not gonna go up anymore. DAMAGE control now.

    • Dec 8, 2018 at 7:05 am

      As I said, nothing real has happened yet. But inter terms of the FANGMAN, maybe it’s time to wake up:

      NVDA down 49% from the peak; FB down 37%; NFLX down 37%; APPL down 28%; …

      • Beverley L Kennedy
        Dec 8, 2018 at 3:36 pm

        Love to know why other countries are cutting oil output while the US stands silent this seems to be a very unfair and uneven one way set up.
        Also the central banks tend to be reactive rather than proactive waiting until considerable damage has occurred rather than preventing it.
        Clearly they need applause for reactive riding to the rescue
        Self regulation by industry has its limits. The rocks aren’t exposed during good times but they certainly are now. Worth reading Aeron Davis book “Reckless Opportunists” for a map as to how we have reached this juncture and what lies ahead.

        • Rowen
          Dec 8, 2018 at 4:02 pm

          Believe it or not, OPEC+Russia cutting output helps the US by putting a floor on crude, since the US has become a net exporter of oil via fracking.

          Sucks for the groundwater though…

  5. MCH
    Dec 7, 2018 at 8:35 pm

    Ok, now that we have lost the equivalent of an Apple, things are becoming more interesting. But you know, the odd Hong is that TSLA isn’t a big loser these last few days. But if they were, I would be at a loss on how we can fit that T into FANGMAN. I suppose if we dropped N and G and somehow added an R, it would fit.

    But nothing lasts forever, the valley companies will rise again, just wait.

    • robt
      Dec 7, 2018 at 9:30 pm

      About 360 is the conversion price for Mar 2019 Tesla convertible bond debt. Magically the price is now about 360, having gained 100 dollars a share to arrive at about the conversion price by the exact date of the beginning of the qualifying period. It may take some real magic to hold the 360 for the 3-month qualifying period.
      Will bondholders wish to convert even if the shares stay above 360? Will Tesla change the conversion rate to induce more bondholders to convert? And will shareholders convert when they could just wait until March to cash out rather than take the chance that converting and having the share price fall, erasing any benefit they gained by converting?
      Finally, if the bonds are held until March, Bloomberg reports that Tesla has approached bondholders with an offer to pay half cash and half shares should the price remain above 360. This is presented as a show of confidence by Tesla in its ability to pay from cash flow – but another interpretation may be that they’d rather give paper than cash and it would only represent less than 1 percent dilution.
      If they don’t stay above 360 by March 1, Tesla is obligated to pay all cash.

      • JZ
        Dec 7, 2018 at 10:25 pm

        Here is what I think. Could be wrong. I think Elon wants to pay shares, NOT cash. I also think the bond holders have already shorted Telsla. If Tesla stock is above 360$, they will ask Elonnfor shares and cover the short. If Telsla is below 360$, they will ask Elon for cash and buy shares in the market to cover the short and their buying would make shares price gets close to 360$. In the case if the bond holder have NOT hedge and shorted Tesla stock yet, their behavior is that if Telsla shares are above 360$, they will ask Elon for share and sell in the market, which will bring down the prices to 360$. Elon and his backers must ensure above the 360$, other wise Tesla will lose cash. The short sellers may attack and make Elon lose cash. It will be a fight.

    • Dec 8, 2018 at 7:07 am

      TSLA isn’t big enough in terms of market cap to be in the FANGMAN.

      • Dec 9, 2018 at 1:17 pm

        Apple “secures funding” for Tesla at $520 a share. With $237 billion in cash and a slowing iPhone lineup, Apple should get in the driver’s seat of the next frontier of digital innovation, says Saxo’s head of equity strategy, Peter Garnry. Synergies abound; both companies are vertically integrated, do their own design and engineering, and have upmarket brands. Apple’s financial clout will solve Tesla’s short-term cash-flow issues and allow it to build Gigafactories around the world.
        from Barrons

  6. Gorbachev
    Dec 7, 2018 at 8:53 pm

    What we need is a papa dip so we can pick up a

    few names.

  7. Rick
    Dec 7, 2018 at 9:03 pm

    The S&P 500 has averaged a mid 20’s PE for 20 years. Prior to this, a mid 20 PE was a peak valuation. It’s now the average. The norm. Companies better start lying more in their quarterlys or buying back a lot more stock in order to keep up appearances. Otherwise, we’ll have to average 30 multiples in the future just to keep stocks moving up. And with every Federal, state, foreign budget, pension, 401k, ira, college endowment, 529 dependent on ever increasing stock prices. There really is no other choice. Why else do you think they created “bad is good”

    • Geoff Fulks
      Dec 7, 2018 at 10:11 pm

      I think it’s called the financialization of the economy.

    • cd
      Dec 7, 2018 at 10:40 pm

      SP PE is 18 according to Bloomberg as of today…low as we have seen since 2016…..

      the economy is not slowing down, certain sectors are backing off for sure but this correction has been needed.

      • Rick
        Dec 8, 2018 at 7:10 pm
      • otey
        Dec 9, 2018 at 5:46 pm

        are you sure you are not referring to pe based on the slight of hand perpetuated by goldman alumnus laslo birinyi where he uses operating earnings and not net profit?

        • otis
          Dec 9, 2018 at 6:08 pm

          actually, birnyi is a saloman alum , my bad. he’s a wsj guy, not a bloomberg guy,

          still, the operating earnings pe for the russell 2000 reported by his associates here clocks in at …

          41.45

          https://wsj.com/mdc/public/page/2_3021-peyield.html

        • otis
          Dec 9, 2018 at 6:19 pm

          I recall birinyi using solely operating earnings in the past. i see that operating earnings is now purported to be used just for estimates.

          so, taking that into consideration there is a huge red flag in their actual vs estimated pe numbers for the russell 2000.

          Russell 2000> 41.45 actual, 109.56 actual last year, 24.22 estimated based on operating earnings.

          wow

    • MD
      Dec 8, 2018 at 4:51 am

      Turning Japanese…massive levels of greed, gambling and financial speculation followed by zombie economy permanently on state-assisted life support.

      Expect the state to become buyer-of-last resort before too long, a la Japan.

      Of course, this all inevitable because a system predicated on permanent growth is lunacy, particularly when that growth is largely driven by chronically seeking to pay people less to keep speculators happy, but of course at the same time expecting demand for your product to grow to create the growth you need.

      Neoliberalism:

      Ridiculous system geared to benefit only those working in the world of finance
      Ridiculous problem
      Ridiculous solution.

      • Joe Banks
        Dec 8, 2018 at 8:33 am

        You echo my thoughts on the state of things. Reminds me of what my dad used to say. He was a ceramic tile contractor here in San Diego. He always said slow downs were good because ithey weeded out the bad contractors, the ones that shouldn’t be in the business anyway. I thought the turning point of the last recession was when the government decided to bail out GM. Should’ve let them go bankrupt. Moreover, this empire is done, we are bankrupt and the world will gradually diminish their bond purchases to prop us up. Trump will be blamed for downturn, a democratic socialist will come to power and speed the collapse.

        • S. Weil
          Dec 9, 2018 at 7:52 am

          Well, GM did go bankrupt. The shareholders we’re wiped out, and the management was replaced. contrast this with the banks, who were kept alive as ongoing concerns. Parts of GM were reconstituted under DIP financing from the Government – the only alternative given that private markets were locked up.

      • otis
        Dec 9, 2018 at 6:40 pm

        infinite compound growth while living on a finite sphere is an untenable situation.

  8. sierra7
    Dec 7, 2018 at 9:33 pm

    A rubber band can be stretched on so far before……B..O..I..N..G!!!!!
    If these “leading” stocks are only down fractionally for the year then the FED may decide more tightening is needed. Just saying. As a retiree I would like to see much more “tightening”…….until it strangles all the algos!

  9. james wordsworth
    Dec 7, 2018 at 9:44 pm

    Well, for one, gold had a good week, after a pretty awful year so far. With cryptos disintegrating, it seems to be the only thing left going higher.

    It has amazed me the last few years to see the PE’s being given by the market. A 20 PE implies paying 20 times earnings (20 years worth of earnings if growth is flat). But in a time of massive tech change the chance of any tech company maintaining any dominance for even 10 years is darn low. In my thinking tech companies should get lower PEs (despite the growth rates) because the future is so uncertain. But what the heck do I know.

    • Rowen
      Dec 7, 2018 at 11:01 pm

      “It has amazed me the last few years to see the PE’s being given by the market.”

      Stop thinking like a retail investor. Think like a passive investor who’s allocating x dollars per month to their 401k/IRA. The elasticity of stock demand by retirement accounts is near infinite. “Don’t worry about the price. Buy and hold for the long haul.”

      And it’s human nature to always select the option with the biggest ROI. So of course, a positive feedback loop develops. Until that loop stops.

      • JZ
        Dec 8, 2018 at 1:55 am

        When ever I hear people say “Gold has done well or badly” I just shook my head. When someone say this, it implying “Dollar is what I want and gold has transferred more dollar in my hand”. Gold is NOT about transferring more dollar in your hands. Gold is about when you do NOT want dollar any more. Gold has ALWAYS done nothing. It has NOT changed in thousands of years. It is dollar that has changed.
        I also shook my head when people compare bit coin to gold. It all comes down to trust. Human can ONLY trust something nobody else can do anything about it. Anything human can do something about it, human should NOT trust. Nobody can do anything about gold. For bit coin? They say human can NOT do anything to the math. Agree. But I can shut down the internet, virus, take out electricity, lock your phones, destroy cell towers.

        • Harvey Cotton
          Dec 8, 2018 at 3:04 am

          Well, here is a quiz for you then. How many grams of gold is a Big Mac worth?

          Without using currency as units of account, there is no way to assess the value of things using just gold. Moreover, gold is just as arbitrary as anything else. The overwhelming use of gold is for jewelry. It has value because humans assign arbitrary ornamental value to it.

          Gold is also subject to the whims of humans. Governments can confiscate it. Governments can shut down mining companies. Governments can alter the market by selling their reserves of it.

        • MD
          Dec 8, 2018 at 5:00 am

          True, but unlike tulip bulbs, coral, cryptos etc its arbitrary value has endured for many, many human lifetimes.

          Governments clamping down by closing mines and calling it in too would be great – its value would skyrocket!

        • JZ
          Dec 8, 2018 at 10:49 am

          Harvey, Gold is NOT about everyday uses. Gold is about what you hold when countries border changes or government is reestablished or currency wipe outs. That’s said, 500 years ago, you pay servants 1 OZ gold every month for their service, and you pay 1 OZ of gold for a good suit made by tailor, today the 1200$ to 2000$ per OZ can still get the same thing done.
          Government can shut down mines, confiscattions and yet gold NEVER changes. This is NOT arbitrary value. This value is why gold is precious and it is the only thing human trusts when human are using violence against each other and still need to trade to survive. You can say you want guns more than gold at times like that. But I assure you when everybody has guns, you would want gold. Any government thinking about confiscation is at the risk of triggering revolution. Come on, I mean Clive Bundy will risk his life for cows. Gold represents “persuasive” power than wins trust when facing violence. It represents good human relationships and trust among each other as opposed to “coercive” forces represented by violence and that’s why people wear gold to represent themselves, NOT guns or knives. To say this is “arbitrary” value assigned to gold is NOT capturing deep human emotions.

        • elysianfield
          Dec 8, 2018 at 12:49 pm

          JZ,
          Gold’s value is in it’s relative liquidity. It is a historical bug-out currency.

          ” But I assure you when everybody has guns, you would want gold.”

          With all respect, if you think as you have posted above, you may never have found yourself in “sporty” circumstances.

        • JZ
          Dec 8, 2018 at 3:51 pm

          Haha. I do NOT mean I want to be the one holding gold while everybody else has guns. What I mean is when everybody has guns, even government has to think twice using violence to confiscate gold. And when one is in an environment like that, it means the fiat currency has no meaning any more, the only thing people trust in concucting transactions would be gold.
          I agree that by no means gold can compete with fiat in terms of convinence. If one wants the fiat, go by stocks bonds and real estate. If one does NOT trust the fiat, get gold and guns. I see NO place for bit coin though other than smuggling internationally in peace time.

        • MarkinSF
          Dec 9, 2018 at 12:49 pm

          We get it. NOT, ONLY & ALWAYS should ALWAYS be capitalized.

    • Wendy
      Dec 7, 2018 at 11:30 pm

      Interesting point about gold. Bitcoin was supposed to be a digital form of gold, but now that it has had a meltdown, there seems to be a resurgence in the barbarous relic of physical gold. Apparently the cost of mining Bitcoin is higher than the payout leading to a death spiral. As Bitcoin is dropping, gold is rising. What an expensive lesson Bitcoin has taught.

      It will be interesting to see if gold can top $1300 as Bitcoin sinks below $3000.

      If Bitcoin taught us nothing, at least it was a barometer for the bubble chasing effect from low interest rate easy money. FANG stocks going down, should have led to Bitcoin going up, but since Bitcoin was part of the bubble, it has declined as well. In the flight to safety it appears as though only cash and gold seem to be weathering the storm, and even this could change on a moments notice. So much for predicting the future, I will stick with predicting the past.

      • Gershon
        Dec 8, 2018 at 11:03 am

        Bitcoin was supposed to be a digital form of gold, but now that it has had a meltdown, there seems to be a resurgence in the barbarous relic of physical gold.

        Call me a Luddite, but I never understood how a scam cryptocurrency “minded” on computers with an intrinsic value of zero was ever going to replace physical gold, a trusted store of wealth for 5,000 years and the ultimate hedge against the deranged money-printing by the Keynesian fraudsters at the central banks.

        • Howard Fritz
          Dec 8, 2018 at 7:45 pm

          Bitcoin’s strength came from its noncentralized nature and impossibility of duplication (with minor exceptions). Bear in mind gold must be purchased in bulk to be bought as close as spot as possible. I’ve had a kilo of gold in the back of my mind for years now but consider this in an emergency how would I liquidate or in good times it won’t pay a dividend/ interest like stocks or cash in the bank. Oh well, I guess I’ll never buy it.

    • MC01
      Dec 8, 2018 at 2:15 am

      I am saying this as a gold owner: never trust what the newsletters and gold bug websites say. Never.

      I used to read several gold-friendly newsletters and their main business has long been not pitching the yellow metal itself, but mining company stocks, especially those of highly dubious small caps.
      Those who bought, invariably at inflated prices, are now holding penny stocks such as Kinross Gold and Eldorado Gold. Which is fine if you want to own volatile penny stocks in the mining sector (because that’s what they are) but not so fine if you believed the press release. The same applies to those poor souls who bought, at even more inflated prices, stocks of the China National Gold Group, reasoning the Chinese government would never allow stocks of the world’s largest gold mining company to crash. Those who unloaded this hot potato at the top have made a nice tidy profit. The others… I hope they didn’t plan to buy their children Christmas presents with the proceedings.
      Lesson learned?

      • Jaco
        Dec 8, 2018 at 3:36 am

        You wrote>>>>>>I used to read several gold-friendly newsletters and their main business has long been not pitching the yellow metal itself, but mining company stocks, especially those of highly dubious small caps.
        Those who bought, invariably at inflated prices, are now holding penny stocks such as Kinross Gold and Eldorado Gold.

        You must not read them anymore – because most of them tout timing and GDX/J instead of individual miners/technicals/fundamentals.

        The fact that gold has seen a minor rebound yet Silver is lagging and the mining stocks are near Dec 2016 lows, says that Gold will remain rangebound in the short term.

        By the way, I wont be suprised at all if Kinross sees a three-bag increase over the next 12 to 14 months. It’s a good miner.

      • Paulo
        Dec 8, 2018 at 11:08 am

        Mining has always been like that.

        About 30 years ago I was doing lots of flying for several mining companies. I knew a very wealthy and successful drilling contractor who worked for these companies, a person who had also made a fortune in stocks along the way. Let’s put it this way, he had an estate on 5 acres of beachfront south of Vancouver BC, the hub of crooked penny mining stock manipulation. He bought a working gold mine so his kid would have a summer job running machines (a high schooler). Anyway, one day I mentioned I was thinking of investing a few thousand in such and such property and he just shook his head. He said, “It’s not the property that matters, it’s the promoter. If you don’t know the promoter you shouldn’t be investing anything”. I took it to heart and kept to what I did know, fixing up houses.

        I worked there for 3 seasons over the next 10 years and watched promoters operate. Cheesy suits, gold chains, they would meet the private jets flying in from wherever, Chicago, NY…and I would then fly the pax out to the properties where they would be wined and dined for a few days to return home hung over and happy with their inside look at a ‘real working gold mine’. Rinse and repeat. It didn’t happen often, but the scam kept going.

        Nowadays, it’s all done with ‘inside newsletters’ and online. Potential investors think they are smart because of what they read online, just like the fleeced sheep of old visiting their ‘working’ gold mine.

        My boss and the drilling contractor would have whispered conversations in the back office about their properties. Occasionally, they would take an airplane and go look at ground. They would talk about ‘the Chinaman’ who handled their ‘business’ down in Vancouver. These were wealthy guys. I was not privvy to what was discussed, and not invited to partake.

        Because of this mining ‘education’, my stock investment career died before it began except for the tax breaks of Canadian RRSP purchases, which is basically parking money in a mutual fund to defer income taxes for a later lower-income date. It is similar to 401s. Those conservative investments did okay, even through the downturn, and at 63 I am now slowly spending the money saved in such a way to stay below a tax threshold. I used to just take the money out and park it in term deposits, but last year used some for a rental and two weeks ago bought a toy, (a restored Westfalia). Time to slow down and smell the roses. I am waiting for higher interest rates like a few others on WS. If they don’t come, I’ll just get by spending less. We don’t spend much in our house, anyway. But there is a time when savers need to dip into their principal. I look around me (in my sixties) and see people dropping. My good friend’s wife has a return cancer visit. Another couple just died this summer….in their late sixties. The list is long, but life is not. There’s more to living than investing and counting decimal places. Hopefully, a Market crash will provide a refresher lesson.

        • kitten lopez
          Dec 8, 2018 at 2:07 pm

          i love when you tell your own personal stories that happened long ago enough that you have lessons ..or not (smile). i realize how much i miss my elders. all elders. i curl up on the sofa when my local radio station, kpoo, has elders just talk about ANYTHING. how things were even with the most mundane things.

          i finally have a vision that there will be at least a TINY rebellion against the magic phones and death of everything, a renaissance with making and growing things loving what’s around us that’s natural including ourselves and each other.

          will it “save” anything? i think it’s too late for that. but it’d be tragic if as we all have nothing left to lose there’s a flip flopping of who gets to run the world from here on out.

          in my tinier vision that at least seems more realistic than people putting down magic phones and seeing themselves and each other without having bouts of vertigo or drug-dampened panic attacks so they can rebel and at least NOT NEED ALL THE CRAP (because not keeping up is its form of rebellion as you well know and see, Paulo, but it sucks being alone when your neighbors are in terror, dying, evicted, or broke), i swear i see some of you older cats being like rock stars movie stars for how to LIVE again. hell, i feel it and i’m already or only 51. depending on how you see it. i feel 15 with how my body’s changing AND how the world is nothing like how i thought it was all this time.

          but yes… people are dropping and yet many newer younger people have even yet to LIVE, so i’m waiting for the “snap.” because when you’re already in student loan debt and no way of paying it back with gig jobs and you can’t afford more than a squat, you’ve got nothing left to LOSE…

          then things get interesting and i hope folks like you who have the long view can help the ones with no view left. it’s like that. i feel for these young uns. it’s like they are dead already.

        • a reader
          Dec 8, 2018 at 2:08 pm

          You must have been flying during the Bre-X Minerals epic (salted gold ore samples, from a penny stock to $280/share, people falling off helicopters over jungle, etc).

          With regards to the finances, I’ve been doing a similar thing, drawing less income as to minimize my taxes. This can be done without cutting the lifestyle down to the bone. How? By not having income-sucking debt, that’s how. Not easy, as the whole system is set up to leach off all the income one can generate, and then some.

          And god forbid one tries passing some of the saved capital on to his children so they start out in life without a debt. Tax the already taxed! (inheritance taxes)

          In general, I see people around me live as if they were going to be alive forever. Removing all hardship from a society sets it adrift; it’s like a ship with a broken mast.

  10. vinyl1
    Dec 7, 2018 at 9:58 pm

    In an environment like this, once the market starts to go down, it will continue going down.

    Everybody is sitting on huge gains from the past 10 years. Nobody wants to be the last one out the door. Selling pressure starts with margin calls and de-leveraging, but soon spreads to the general institutional traders. If the trend is down, they will stop buying the dips and start selling the bouncebacks. Eventually, the general investing public will hear about what is going on and decide to sell while they still have a profit left.

    Part of the FANGMAN problem, I believe, is the S&P 500 bubble bursting. The S&P index funds hold enormous amounts of these stocks, and if they have to sell too, then there are no buyers.

    Eventually, smart money and value investors will step in, but we are a long way from that point.

  11. akiddy111
    Dec 7, 2018 at 10:13 pm

    Today, the Fed’s Bullard argued against a December rate hike. He’s worried that the 10 year yield will invert this month. That guy has a good track record when it comes to turning the market around.

    December is when Wall Street pays annual bonuses. If Bullard cannot deliver a Santa rally, then nobody can.

    • KPL
      Dec 7, 2018 at 11:37 pm

      Yup! Remember Bullard Low (Oct 2014). With one word “QE4EVER”, he turned the market around. If Powell goes he would be the man to keep the money spigot open FOREVER.

    • Dec 8, 2018 at 7:11 am

      Bullard has argued against EVERY rate hike from day one. Only 0% is good for him. But he doesn’t get to vote this year on the FOMC. So let him talk. That’s all he can do.

    • Lance Manly
      Dec 8, 2018 at 7:18 am

      Skipping the rate hike could have the opposite effect and cause the market to fall more. People will start to think the Fed is panicking about the economy rolling over. Everyone knows that the sugar high of the corporate tax cut and resulting bottom line boom ends next month.

  12. andy
    Dec 7, 2018 at 10:25 pm

    All of FANGMAN will fit inside of what they lost so far pretty nicely.

  13. subz
    Dec 7, 2018 at 11:12 pm

    Trump repeatedly tweets trying to boost the markets.
    But wait, even the Algo not buying it up.

  14. Dec 8, 2018 at 12:27 am

    Wolf, we’ve long known that the whole financial media establishment is simply an arm of Wall Street. Although anyone with a functioning cerebrum knows about “adjusted” earnings, setting earnings estimates to beat them, and the absolutely obsequious sell-side market analysts’ recommendations, no one in the media calls them on their BS. CNBC, et all, just report the “beats” at earnings time without even saying what the earnings are, the P/E, or any other info an investor would need to know. It’s disgusting. Once in a while we get some good insight from Bloomberg, but they long ago crossed over, encouraging “the trade”, which for the average investor is like just handing their money to Wall Street. We see some good reporting from Barron’s, and the WSJ does some great investigative reporting, ala Gretchen Morgenson, etc., but the paper still works for Wall Street much of the time.

    • Timothy J McLean
      Dec 8, 2018 at 9:54 am

      I couldn’t agree more that the financial media is an arm of WS. I used to listen to the guys & girls on fast money, but when most of their calls started losing money I woke up. There are a few deep thinking people out there, like Wolf that dig deep into the REAL numbers and report facts, not fluff. Most people don’t want to believe that most of the bank underwriters only take companies public to earn the large fees. They don’t care that most of these companies could not obtain a conventional bank loan because they lose money. Lyft and Uber announcing IPO’s this week is a serious red flag. They realize that the window is closing on zombie companies going public.

      • wapiti
        Dec 8, 2018 at 11:02 am

        Fast $ Jon Najarian hyped Square (SQ) up into the $70’s range when he called high volumn Jan calls. The stock shot up…only to tank into the the $61 range a few days later. Viewers need to read the fine print of the Cramer/Fast $ et all broadcasts. AKA watch your butt. These guys/gals are in it for themselves.

      • Mike G
        Dec 8, 2018 at 1:16 pm

        They’re not pushing stuff that’s good for you to buy, they’re pushing stuff that’s good for them to sell.

        • Dec 8, 2018 at 11:06 pm

          Yes, the folks like Wolf, Gretchen and a smattering of others are few and far between. Caveat emptor.

  15. GP
    Dec 8, 2018 at 2:35 am

    Sounds like you are saying there won’t be a Santa Claus rally this year :)

    • LessonIsNeverTry
      Dec 9, 2018 at 12:54 am

      Intraday it sure looks like everyone is trying to time the start of the “inevitable” Santa rally. Then it fails. I expect one myself and keep being proven wrong.

  16. LouisDeLaSmart
    Dec 8, 2018 at 6:05 am

    \\\
    Silicon valley is struggling to forcefully create new markets for it’s products. Good examples are 5G modems (of questionable health risks due to frequency used), self-driving cars (LIDAR has issues with rain and snow conditions), home portable biomed diagnostic devices (a series of unsolvable technical problems), drone delivery systems (limited range and carry capacity, as well as urban area unavailability)… I am not saying that one should not be creative, and pursue novel ideas (Electrical cars would be a great example). These ideas might even find a niche market where they will make a profit. My point is that the market is saturated with high-tech solutions, and the age of infinite growth is over…something Silicon valley needs to accept and deal with. Just like wallstreet.
    \\\
    And with asset prices sky-high, the income of the middle class stagnating, over indebtedness by student loans and high interest rate debt, there are fewer people that can afford such novel items (novelty items usually cost more until a significant consumer base is reached creating extra profit and incentivising the creation of a competitive market environment). A product needs a healthy consumer base that can afford the product. I am not sure they have one any more.
    \\\
    Read today a great quote:
    “When the market is reaching new highs, it’s all the same to us. But once it drops, we all lose our jobs.”
    \\\

  17. Lance Manly
    Dec 8, 2018 at 7:25 am

    Don’t sweat it. The debt slaves are coming to the rescue with their plastic. 10% annual rate increase in revolving credit in October https://www.federalreserve.gov/releases/g19/current/

  18. Mike R.
    Dec 8, 2018 at 8:08 am

    The Fed is in a bad spot. If they raise, more selling in the stock market and more buying in the bond market. Note how the 10 year has fallen below 3%.

    If the Fed stays put, as one reader above noted, the market will interpret weakness and could see more of the same above.

    The economy is slowing. I look at DailyJobCuts daily and you’re seeing alot of companies of all sizes making modest to large workforce “adjustments”. Hadn’t seen that pattern for quite some time.

    I think it is highly possible that Powell will succeed in engineering a fairly significant bear market for the Donald to lose reelection by.

  19. Balzac
    Dec 8, 2018 at 9:15 am

    “Cassandra was cursed to utter prophecies that were true but that no one believed. The older and most common versions state that she was admired by the god Apollo, and he offered her the gift to see the future in order to win her heart. Cassandra agreed to be his lover in return for his gift, but after receiving the gift, she went back on her word and refused him. Apollo was angered that she lied and deceived him, but since he couldn’t take back a gift already given, he cursed her that though she would see the future accurately, nobody would ever believe her prophecies.”

    It’s 1929 all over again.

  20. AV8R
    Dec 8, 2018 at 10:52 am

    I find it interesting that Facebook will commit up to $24B to share repurchase. North of 5% “return” based on current share price and estimates of $7.50 a share in earnings, management must believe there’s few options likely to offer a better return and capital appreciation opportunity.

    I think the bond balloon is next to pop and a 5% 10y is around the corner but until that day, I expect more of this.

  21. Bet
    Dec 8, 2018 at 11:02 am

    First. Yes CNBC et al are nothing but wallstreet pimps. I do miss Mark Haines
    As he was one of the few to challenge the status quo. His reward was being demoted
    I stopped watching any of those shows years ago. But I do read the CNBC news app to see what they are pimping and bloviating

    Next. What goes up hard and fast comes down harder and faster. The shorts are being caught a bit breathless at the hard fast dropping. Unless in higher, shorts are afraid to enter now on such deep oversoldness of the markets or individual
    Stocks. One tweet can rip their faces off
    So there isn’t the hard short covering to support prices Both sides are being hammered now. Short and long. Minxy
    Markets

    Indexes head lower yet. Markets always makes one pay for greed and complacency
    Nine years of relentless dip buying. There is now a price for that. Be patient and in a few months some hopeful buying opportunities

    • California Bob
      Dec 8, 2018 at 1:07 pm

      I don’t believe Mark Haines was ‘demoted.’ He died (which, I guess, is a form of demotion). He was headlining CNBC when I was getting ready for work, back in the day (about 7am PST–‘prime time’ for financial news).

      If I’m wrong, please explain how, why and when he was ‘demoted.’

      • Bet
        Dec 8, 2018 at 5:07 pm

        They bumped him off the morning Sqwaukbox. Put him on the floor with Erin. There he was no longer able to challenge the talking points who came on. I figured he was done for when he messed up Elaine Choa’s talking points ,When she was a cabinet member under Bush. I remember how PO’D she looked when Mark kept pressing her with follow up questions
        Questioning her canned Bs
        Loved him for that

        And after he was gone no one to rein in joe kernen anymore

        • California Bob
          Dec 8, 2018 at 10:19 pm

          Thanks for the clarification.

  22. wapiti
    Dec 8, 2018 at 11:09 am

    On Friday AAPL closed a gap that has been open since May 2. Right at the EOD Friday. No accident. Buy GF and hold through the weekend? Risk/Reward. These bots are programmed by PhD psychologists as much as by market gurus. Swing and day traders need hard hats and combat gear to maneuver this market.

  23. Dec 8, 2018 at 12:06 pm

    The futures markets had to be shut down repeatedly on Tuesday before we took a market holiday for a one term president. Then they gave up what looked like a capitulation rally Thur, retracing the gains on Friday. Right now we’re holding a Chinese woman in a Canadian jail (without formal charges, for extradition) for doing the same thing our pres did in the 2016 campaign. He had nothing to do with it, they were open charges left over from the Obama era. The NYSE is an international market, and in the court of world opinion the futures are down (presently).
    https://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500.html

  24. Bobber
    Dec 8, 2018 at 12:46 pm

    I’ve been in CDs, so I haven’t been impacted by recent stock market drops. I’d like to move some money over to stocks, now that they are down a bit, but I did a search over the last few days and couldn’t find anything worth buying. The average stock still looks way way overpriced once you apply reasonable expectations for earnings growth. Plus, even if a stock looks like it might be worth a gamble, you could get cut by the falling knife of negative sentiment. For example, I put a small amount of play money in GE and some beaten down oil stocks and lost 8% in about three days.

    I think I’ll wait a while before buying anything. I may detach from the market and re-evaluate in a year or two. Watching the daily movements is tiring and makes you lose focus on the big picture.

    • Broker Dan
      Dec 8, 2018 at 3:13 pm

      What’s a high end CD paying these days?

      3% at 24 months?

    • JZ
      Dec 8, 2018 at 4:00 pm

      I thought you announced in wolf street that you will put 5% of your saving in facebook 4 months back. Not you?

      • Bobber
        Dec 8, 2018 at 4:05 pm

        That was not me.

        • JZ
          Dec 8, 2018 at 5:32 pm

          could be California Bob. One of the regulars announced it and triggered some discussions. Main point is his position sizing is small and he is willing to take the risk.

        • California Bob
          Dec 8, 2018 at 10:26 pm

          Not me. I bought some FB some time ago; bought at $40 and sold at $80 to give some idea of the time frame. At the time, I thought ‘social media’ was silly but it seemed like a good bet. Now, I wouldn’t touch it for moral reasons. I’ve never mentioned that transaction on this site before.

    • Dec 8, 2018 at 5:45 pm

      You can buy stocks, then put on a hedge with an inverse ETF and wherever the price bottoms that’s your cash basis. The strategy pays for itself. On the upside you give back any gains. I believe the institutional thinking has shifted about shorting the market.

    • David Horowitz
      Dec 8, 2018 at 11:16 pm

      I am also in CDs right now. I’ll be buying stocks when the S&P 500 is trading in triple digits and let the suckers ride the roller coaster down.

  25. Nate
    Dec 8, 2018 at 3:48 pm

    Strikes me that this could be the beginning of a demographic trend where the Boomers (those that have stock anyway) are gonna cash out to support their retirement.

    Give it another few years to bottom out then their kids will be partying on what’s left of their money for awhile. After that watch out below, unless we start solving real problems with US finances in general anyway…

  26. nofreelunch
    Dec 8, 2018 at 4:48 pm

    Nate, BINGO. This happened in 2009 with some of my parent’s friends. They started to realize the market was taking away their retirement they though they were going to have, so started selling out of equities, and stayed out, even when the market came back a couple years later. The people with the highest equity allocation by age are the 50-60 year olds, and they are starting to get nervous. I know financial advisors who have been trying to get clients in that age group to reallocate to safer assets all year, but they didn’t want to listen. Now they are listening.

    • Rowen
      Dec 8, 2018 at 5:06 pm

      at age 70.5, they don’t have a choice on whether to start liquidating. I guess they could take the RMD in-kind, but they still would have to have the cash to pay the taxes on the FMV.

    • Nate
      Dec 9, 2018 at 9:57 am

      Yeah my older friends who had been dispensing “investment advice” because they have held Amazon stock for awhile and felt like geniuses aren’t saying much at the moment.

      My family financial advisor is one of the shoe salesmen types who keep flogging the corporate buy and hold line so had to fight him on it to get mostly into cash before the latest downturn fortunately. Will let it ride for awhile no doubt. Better to have cash when you need it than to be forced to sell at a loss – something I don’t seem to be able to get him to understand.

  27. GSH
    Dec 8, 2018 at 5:17 pm

    We need to get through the tax cut valley of death over the next few months. Year over year comparables won’t look all that great until real earnings growth kicks in (or not).

  28. Sadie
    Dec 12, 2018 at 9:26 pm

    The free money drunks on Wall Street were given a short reprieve from their hangover. Will they go on another free money binge again If the Fed lightens up?

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