Investor General’s Warning – Following Investment Advice can be Dangerous to Your Wealth

My currently favorite outlet of news because of its heavy use of ‘probably’ and ‘unexpectedly’ treats me to the following beauty today:

Aug. 18 (Bloomberg) — Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades.

Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show.

I wonder Citigroup, Bank of America ok, but which other firms? I also wonder if those companies used the same investemt strategy for themselves or if they followed another one? Were we offloading some crapy shares to the unsuspecting public or are they really that inept. Hhm, this just tells you that you can’t trust your investment advisor.
Unfortunately, investing in energy and pharma is a better in my view, because at least they produce something real of value to me, whereas Wall St. (or the ‘financials’) do not. Maybe holding on to those losers is a good idea? NO IDEA I HAVE, since I am not giving investment advice, and if I did you shouldn’t believe it (see above why).

And as if this wasn’t good enough, here is another beauty from the same article:

The recommendations didn’t work because companies with the worst earnings led the 45 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago. Securities firms that failed to foresee that the hardest-hit stocks last year would recover fastest steered investors to drug and energy producers, which have trailed the MSCI World Index by more than 22 percentage points, the data show.

“Analysts are attached to fundamentals,” said Romain Boscher, who helps oversee $18.5 billion as head of equities at Groupama Asset Management in Paris. “This is a technical rally, a rally of sentiment. Analysts were too defensive. There was an inflection point and they didn’t see it.”

Nice way of telling everyone that the ‘rally’ is based on nothing more than hot air, generated by the servers that do the program trading. In fact, what he is saying is that this recovery is not only jobless but also completly without foundation in reality.
‘Fundamentals’ mean real things like earnings, profits, jobs, etc all these things that are important to normal people, like me and you, you know.
Now, fundamentals are no longer important, is all about ‘sentiment’ Dr. Feel Good, group therapy, wellness type of touchy feely stuff.
No more need to analyze anything, just get with the feeling. A rally of sentiment, BWAWAHA.

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