Index Investing Unmasked: 96% Of Stocks Are Garbage

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Daniel Drew,  2/25/2017

Warren Buffett

Index investing means buying a box of garbage stocks sprinkled with a few hope and glamour stocks whose price gains are solely a result of underperforming fund managers grasping for quarterly bonuses and retail investors juicing up their portfolios in a doomed attempt to catch up on their retirement targets.

While mom and pop buy a Vanguard index with their $500,000 and get front run all day by proprietary traders, the capitalist televangelist Warren Buffett will continue to actively trade billions while preaching the miracle of buy and hold investing.



The Entire 2008 Crash Could Have Been Avoided With One Simple Trading Rule

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Daniel Drew,  10/11/2016

Hero Trading

There is a stark difference between BTFD and trying to save the world. While BTFD can be a valid strategy within shorter time frames, it's not appropriate when the market closes down 3% or more for the week.



BTFD! One Chart Shows Why This Is The Only Strategy That Matters

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Daniel Drew,  10/9/2016

BTFD

We've all been told to BTFD. Now, we finally have a chart to remind us why this is truly the only strategy that matters in these "markets."



Average ROI in Corporate America Has Collapsed By 80% Over Last 40 Years

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Daniel Drew,  2/8/2016

Declining ROI

American corporations have been playing a musical chairs game where the loser gets taken out back and shot. During the last 40 years, the life expectancy of firms in the Fortune 500 has declined from 75 years to less than 15 years. In what Forbes called "the most important business study ever," Deloitte released The Shift Index, which compiles the ROI of 20,000 US firms from 1965-2009. The chart shows an 80% collapse in the average ROI of American businesses.



Fed Scrambles as Oil ETN Premium Soars to New Highs

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Daniel Drew,  1/17/2016

iPath Oil ETN Premium

Amidst the market chaos on Friday, a trader brought something strange to my attention. He asked me exactly what the hell was going on with this ETN he was watching. I took a closer look and was baffled. It took me awhile to put the pieces together. Then when I saw the story about mark-to-market being suspended, it all made sense.

With the oil fallout quickly spreading, the Fed is resorting to behind-the-scenes manipulation of energy debt, and now, that apparently includes oil ETNs as well.



Janet Yellen Can't Pop The Biotech Bubble, But The SF Gate Can

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Daniel Drew,  7/28/2015

Superman Roller Coaster

Biotech has a special place in the heart of the gambler investor. In the modern market where the average investor doesn't stand a chance, some of them indulge their hope and turn to lottery tickets. If only they can get the next Gilead or the next Amgen, they will become the next wildly successful "maverick" investor. More lottery tickets seem to be flying around than usual lately, floating alongside the recent biotech bubble. Some have doubted if this is a bubble. Maybe it's different this time. The SF Gate pondered this exact same question 15 years ago, and the market promptly replied.



Yield Chasers Left Behind As Treasuries Beat Both Investment Grade and Junk Bonds

Daniel Drew,  3/26/2017

Nigerian Prince

The "highest yielding" asset had the lowest return, and the least risky asset had the highest return. This represents the complete implosion of a core principle in modern finance.

So the next time you buy a stock that tanked 20% because "it has a good dividend," consider another high yield alternative: Nigerian bonds transacted over Moneygram.



Buying The Rumor is 300% More Profitable Than Buying The News

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Daniel Drew,  3/9/2017

Earnings Season

In financial markets, hope is more profitable than reality.



The Difference Between "F*** You Money" and "F*** Everybody Money"

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Daniel Drew,  2/14/2017

Fuck Everybody Money

Something strange happened at Google recently. Bloomberg alleges that Google paid its top level employees so much that they crossed the line into "F*** You Money" territory, prompting the employees to pack up and quit. While this intriguing turn of events may have transpired at Google and other technology companies, this would never happen on Wall Street for one reason alone: "F*** You Money" is simply not good enough for the fast money crowd. The pinnacle achievement in the investment industry is "F*** Everybody Money."



How To Avoid Being A Retail Bag Holder

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Daniel Drew,  10/10/2016

Buying When The Market Is Up

One chart shows exactly why weekly price performance matters. This is what happened to anyone who only bought after the market was up for the week.



The Indexing End Game: The Wilshire 5000 Only Has 3,607 Stocks

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Daniel Drew,  8/7/2016

Wilshire 5000

What started with good intentions ended with embarrassment as American economic dynamism collapsed in a cascade of falling profit margins, financial engineering, labor devaluation, and lopsided "free trade" agreements.



Barclays Rigged Its OIL ETN By Limiting New Creation Units

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Daniel Drew,  1/21/2016

Barclays

On Sunday, we warned readers that the iPath OIL ETN was trading at a 36% premium to its fair value. Today, we witnessed the brutal consequences of a two-class market where institutional traders steamroll the clueless retail investor. The OIL ETN plummeted by 17%, representing a loss of $126 million. Today's trading volume was 36.6 million vs average volume of 3.8 million, as institutional selling absolutely crushed retail investors.



Backwards Capitalism: Unprofitable Companies Outperforming For Last 15 Years

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Daniel Drew,  10/12/2015

Backwards Capitalism

Perhaps we've been doing it wrong all these years. Capitalism isn't about making money. It's about who can blow through money the fastest. When it comes to increasing shareholder value, there is, quite simply, no better way to do it.









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