Tags: Farrell | stock | liar | Wall Street

MarketWatch's Farrell: Stock Bulls 'Lying to You Over 93 Percent of the Time'

By    |   Thursday, 26 March 2015 07:20 AM

With the S&P 500 index standing 2 percent away from its record high, MarketWatch columnist Paul Farrell doesn't have a whole lot of faith in equity-market optimists.

"Never trust Wall Street bulls, they're lying to you over 93 percent of the time," he writes.
"Behavioral-science research tells us bankers, traders and other market insiders are misleading us, manipulating us the vast majority of the time."

Farrell doesn't specify how he came up with the 93 percent figure. But he thinks the misleading and manipulating is bound to end in trouble in 2015-16, "igniting another market and economic collapse like 2008." The S&P 500 suffered a 37 percent negative return that year.

"Remember you're playing liar's poker at the Wall Street casino. . . . Stop listening to Wall Street."

The cycles leading to stock market crashes continually repeat, replete with their lying, Farrell says. "Wall Street will keep repeating the same hype, piling it on thicker, deeper, until they finally trigger another meltdown, another crash like 2000, 2008, 1929."

Meanwhile, biotechnology represents one of the stock market's hottest sectors, with the S&P Biotechnology Index returning 55.1 percent in the past year, compared with 14.9 percent for the S&P 500.

Many experts think the move is overdone. "To us, shares of biotech companies find themselves entering bubble territory," Darren Pollock, portfolio manager at Cheviot Value Management, tells The Wall Street Journal. "We think investors are applying too high a success rate on biotech molecules."

Major biotech companies include Gilead Sciences, Amgen and Biogen.

Some market participants compare the surge of biotech stocks to the dot.com stock bubble of the late 1990s. "If any part of the market reminds me of the go-go tech years, its biotech," Jack Ablin, chief investment officer at BMO Private Bank, told The Journal. "It's an expensive sector."

CNBC commentator Jim Cramer is worried about biotech valuations too. "This is not the moment to play with speculative, small-cap biotech stocks that are losing money and might not have any major products on the market for years to come," he said on his "Mad Money" show.
 

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With the S&P 500 index standing 2 percent away from its record high, MarketWatch columnist Paul Farrell doesn't have a whole lot of faith in equity-market optimists.
Farrell, stock, liar, Wall Street
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2015-20-26
Thursday, 26 March 2015 07:20 AM
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