Fake News, False Profits, and Market Beer Goggles

You are receiving this as part of your free subscription to Critical Signals Report. To remove your email from this list, [unsubscribe here](. [Critical Signals Report] April 10, 2019 [How We Got Here, Where We're Headed and Why Experts (and the FANGS) Are Setting You up for the Worst Hangover Ever]( By Matt Piepenburg Dear Reader, If you've had a chance to glance at [the free report]( I sent you yesterday, I'm sure you're a bit miffed, wondering how things went so awry with hardly anyone noticing. Today I'm revealing the four major ways the truth has gotten so muddied, diluted, and manipulated. For a closer look at this crisis, download the latest report I've put together for you here: - [The Great Storytelling Fog from Tesla, Wall Street, and the D.C. Swamp]( In the meantime, here are the four biggest culprits at play today: - Companies misrepresent their balance sheets via Ex-Items Accounting. - Washington literally invents its own version of employment and GDP math by making 2+2=1. - The media glosses over the debt elephants in the room. - Financial advisors stick to an old template that no longer applies to a post-2008, Fed-driven market. Besides, most advisors get paid as a percentage of how much you invest. Of course they're going to do whatever they can to keep you invested anywhere they can. Let me explain why this is so problematic... As someone who has spent the last 20+ years sitting down with the fancy lads of finance - from the Square Mile of London to the hedge funds of Wall Street, I've bent the ear of more than one over-priced banker and portfolio manager. They tell me many things that don't make it to the prompt-readers of the financial media. I've also been investing in markets myself since the dot.com era of 2000, through the sub-prime fiasco of 2008, and straight into the current "everything bubble" of today. The Good, the Bad, & the Ugly I've seen the good, the bad, and the ugly - bear and bull. I've also advised some of the wealthiest families in the world on how to make and preserve money. I've seen a lot. Yet nothing beats the ugliness I'm seeing today. In my first report, [12 Ways to Protect and Grow Your Wealth Today](, you see how the government can take triple-digit cost increases in everything from tuition, childcare, and medical expenses... Yet somehow convince you that inflation is annualizing at a 2% rate. Pure nonsense. You've also seen how company CIO's have been legally allowed to report earnings without having to fully disclose over-head through a clever accounting trick known as Ex-Items Accounting. This little scam is the equivalent to a lemonade stand that reports only the sale of drinks and not the cost of lemons. Such tricks, along with stock buy-back support from executive insiders and one-time tax breaks, explain why actual GAAP earnings for the S&P have been annualizing at 3.4% since the last peak in 2007. Hardly "booming."... You've seen a similar reality check in the "surging profits" propaganda. From 2012 to today, pre-tax corporate profits have annualized at less than 1.5% as markets otherwise skyrocketed on media hype and Fed support (i.e. low rates and money printing). Meanwhile, that whole "record breaking employment" scheme fed to you by D.C. and Wall Street is completely fabricated. Any quick look under the hood of this clever math will make your head spin. The numbers are so doctored, they're simply un-true. Period. Just ask one out of two children in the U.S. growing up in welfare-assisted homes. So we've all been hoodwinked by the bigwigs and talking heads. Still, there's no denying the market highs we've seen since 2009. But it's almost impossible to trust these markets any more than you can trust the folks that have been manipulating them and YOU for years. As both my [12 Ways to Protect and Grow Your Wealth Today]( and [Why America Is Already the Most Socialist Country in the World]( reports make empirically clear, we got to such crazy highs precisely because we've been high on market-meth-i.e. DEBT-for far too long. Debt, of course, can be fun-for a while. It buys good times! And while we're drunk on it, it takes away fear, common sense and caution, as anyone who has ever worn beer goggles already knows. Beer goggles blind us to realities, like our exponentially rising corporate debt level... Which leads to market bubbles like this... You don't need [hedge fund expertise](, fancy schooling, lots of math, and crazy hype to see this bubble for what it really is... By every metric, our stock market is now grossly over-valued, whether one looks at PE multiples, cyclically adjusted PE multiples (i.e. the "CAPE" multiple), Q-ratios, price to earnings growth ("PEG") ratios, price to revenue multiples, or the "Buffet indicator." We're definitely in a big bubble here, folks. How to Get Mega-Rich in a Mega-Bubble But no need to panic. Look, I've traded bubbles before. In fact, that's what made me rich. I came into wealth in my late 20s, thanks to the dot.com bubble of the late 90s -and I stayed rich. I sobered up, took off my beer goggles and got out of that tech craziness while everyone else was too drunk on names like Cisco, Yahoo, and Microsoft to recognize the warning signs. Today's bubble is different. In fact, it's worse. Nearly 20% of the above S&P bubble derives its market cap from five stocks-Facebook, Apple, Amazon, Netflix and Google-i.e. the "Fangs." Indeed, today, we are literally in another tech bubble, but even more drunk. When the Fangs fall, the entire market goes with them. That's scary. But if you're drunk on these highs, you can't soberly assess the risks. It's easy to believe that the great FANG stocks can never go down. The same was said about the "safe" big names of the dot.com era, and again with the "Too Big to Fail" firms in the 2008 crash. But big names DO tank. And when the dot.com bubble popped under its own weight... Yahoo dropped by 87%... Microsoft tanked by 65%... ...and Cisco bled by 54%. The fall of the FANGs will be no different. I'm not saying these stocks will disappear, I'm just saying they're over-priced. A reckoning will come. Even for Amazon, which has a horrific balance sheet... And let me remind you, those same Fangs collectively fell by 20% in just 24 days this past December. But that's nothing compared to what lies ahead... I hope YOU are starting to see the light. Sadly, the rest of America is not. They are "all-in" with their drunken chips fully on the table. Household stock exposure (i.e. beer goggle blindness caused by market bubbles) has never been higher. Which means the hangover ahead is going to be a killer for the majority of Americans. Folks: don't be like everybody else. [Heed this warning](. Be informed, be safe, and be profitable, Matt Piepenburg --------------------------------------------------------------- You are receiving this email at {EMAIL} as a part of your free subscription to Critical Signals Report. Remove your email from this list: [Unsubscribe]( © 2019 Critical Signals Report All Rights Reserved. Critical Signals Report | 1125 N Charles Street | Baltimore, MD 21201 North America: 888.384.8339; International: 443.353.4519; Fax: 410.622.3050 [Contact Customer Service]( Website: [( Nothing in this email should be considered personalized financial advice. 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