A Flagrantly Overbought Stock Market — Time For The Small Investor to Play Chump Again

Some things are totally predictable. The sun will rise in the east and set in the west. The tides will go out after coming in. The Yankees will always have more to spend on talent that their rivals.

Something else is totally predicable. After Wall Street sharpies have rigged the stock market to rise in ways that generate undeserved profits for themselves for a long enough time, they’ll complete the rip-off cycle by suckering in small investors to take the inevitable dive that follows.

This isn’t a one-time thing. This is an always-happens thing. You see it five times, 10 times, lots and lots of times, it’s almost too obvious to mention. It’s an old Circle Of Gold ponzi-variant writ large.

Manipulators start the game and others watch them get rich. The sideline watchers hold back suspecting a trick until they are finally conned into believing that THIS TIME IT’S DIFFERENT. They take the bait at last and throw in their savings.

The stock market has been climbing for years during which time the real economy first plunged, then settled into the painful doldrums. In all that time the market riggers, pumped up with tons of cash from an enabling Fed, have piled up more and more undeserved stock market riches. Now it’s time for someone to take the fall. And it ain’t gonna be the market riggers.

If I were guessing, I’d say the the Dow will be pumped up a little beyond 14,000 before the plug is pulled. Small investors took out many billions from mutual stock funds during the rigged run up. Now, bled by the returns they’ve been getting from depressed interest rates on safe investments — rates held down by the market riggers’ friends at the Fed — the fish are finally taking the bait.

The sun will rise in the east tomorrow. A brilliant prediction? Hardly. A rigged stock market in which a fall is soon inevitable, one that hurts the small investors while the big boys lock in their profits. A brilliant prediction? Dah. No. No brilliance required.

(Two books from this author available from Amazon — Fifteen Feet Beneath Manhattan and The Big Belch)