Wall Street Bull: The Dirty Business Model

Wall Street Bull

Wall Street Bull:  Their Business Model is Based on Bull

Wall Streets Business model is based on BS as in they sell you crap advice and charge you a premium. While it is easy for the developed world to point fingers at China and demand more regarding reforms; we need to remember that not too long ago, it was the Wild West in New York.    A significant portion of the transactions conducted years ago would be deemed if one were too kind as questionable by today’s standards. In fact, one could argue that the USA has done nothing to address the issue.

We had the Savings and Loan scandals in the 1980s; then we had the dot.com scam, where any company with a dot.com was allowed to give Nine projections on what they hoped and dreamed off without programme illustrating how these illusions were going to become a reality.  Another instance is the financial crisis of  2007-2008; the real term should be financial fraud as the banks essentially swindled the poor and middle class.

For the record, not one banker was arrested or put in Jail, even though there is conclusive proof showing that most banks encouraged their clients to lie on loan applications. Banks came out with no income verification loans before the housing market collapsed. This meant that you could state any income you wanted to qualify for the credit and the banks encouraged people to do this. So when it became that easy to get a loan, everyone started to buy a house.  The idea moved from owning a home to speculation. No longer were people interested in owning; it; the only goal was to become rich overnight.

Wall Street Bull: Scandal after Scandal with no repercussions

It would be nice if things ended in 2007-2008, but fraud is still the order of the day in Wall Street as depicted very clearly by the story below.

JPMorgan Chase & Co. knew federal authorities were investigating the largest drug-testing lab in the U.S.

But the New York-based bank didn’t share that information about Millennium Health LLC with the people who were about to lend the company $1.8 billion in April 2014 because Millennium said it wasn’t material, according to a person with direct knowledge of the matter.

In most markets, such an omission would be regarded as unethical or worse. But JPMorgan was playing in the $800 billion markets for leveraged loans, where just about anything goes — and often does. 

 The case of Millennium is the latest example of the pitfalls in a market where no one regulates trading. Borrowers can limit who can access their financials, control the type of data they get and even blacklist certain investors from ever buying the loan.  Full story 

This is what took place with the Chinese markets this year.  Everyone wanted to become rich overnight, so they borrowed money and jumped into the markets.  This is all fine when the markets are rising, but when the markets start to pull back, things get ugly. You start to take on losses on money that is not yours. So you have to pay back the original sum of money, plus interest and worst of all this money does not belong to you.  Leverage is good when the markets are going up; it is the trigger fro euphoria when the markets are falling it is the trigger for panic, and that is why the Chinese markets crashed.

Many state the Fed is illegal

The video below does a decent job of explaining how the Fed operates, though the conclusion calling for a collapse is not something we ascribe to now. Why?  Simply put, the masses believe that the Fed is part of the Government, getting them to accept that it’s not, will be a daunting task on its own. Trying to get them to understand that the Fed has been defrauding them from day one well that will take a very long time.  So the system will collapse, but you might not be around to see it. We believe in following the trend; the trend does not yet call for a demise of the Fed.

Wall Street Bull: Apps Being Used To Gain an Edge?

From traders to bankers and money managers, just about everyone in finance is embracing these apps as an easy, and virtually untraceable, way to circumvent compliance, get around the HR police and keep bosses in the dark. And it’s happening despite the industry’s efforts to crack down on unmonitored communications, according to conversations with employees at more than a dozen of Wall Street’s most recognizable firms.

“You’re really able to operate outside of the bank,” said William McGovern, a former SEC branch chief and senior lawyer at Morgan Stanley who now works at law firm Kobre & Kim. “We have seen in our investigations that the ground is shifting under everyone, and technology changes are driving a lot of it.” Full Story

Wall Street Bull & The Conflict of Interest Factor

Many analysts face at least four conflicts of interest that investors should be aware of when assessing research recommendations.

• A typical Wall Street firm doesn’t get paid separately for research. Research is simply a tool to get other business.

• To gain business, Wall Street firms have to attract attention. Raising price targets attracts attention both with investors and at the company whose stock is being praised. An analyst with the highest target on a stock may garner much more attention compared with an analyst with a target near the median.

• To do their jobs, analysts need access to the management of the companies they cover. Human nature being what it is, does a CEO want to talk to an analyst with a high target on his stock or an analyst with a low target on his stock?

• Ultimately, the money an analyst makes depends on how much business he helps his firm generate. It’s not based on how right he may eventually be by not following the crown and raising his targets. Read this about a study on the accuracy of analysts’ price targets.   Market Watch

Other Stories of Interest:

Gold on the verge of a breakout rally? (Nov 24)

Nine ways to build wealth in the stock market  (Nov 24)

China stock market reforms and long-term outlook   (Nov 24)

Bonds will not crash in 2015 (Nov 23)

Dr Copper, economy and the markets no longer dance to the same beat (Nov 23)

Is Crude oil headed higher or lower? (Nov 20)

Is the Dow going to crash in 2015 (Nov 18)

predictions for wild weather, end of Multiculturalism & religious wars (Nov 14)

The Dow Industrials are not going to crash (Nov 11)

Oops we did it again- The Fed is setting up the masses for another stimulus program (Nov 9)

Palladium Bulls are getting ready to sprint  (Nov 7)

Dow industrials set to defy naysayers and trend higher  (Nov 6)