Wall Street insiders are shaken, stirred, and confused right now. They are no longer in charge of their own destiny.Not that they've stopped trying to control their own destiny, mind you, but it isn't there for them any longer. They're still out pimping for more players to take on more corporate debt, and they still think that they can convince new fools to buy at greater prices, but they are confused because their tired old spiel isn't working any longer.
And it isn't working because Joe Average no longer believes that tech miracle company "ABC" is going to keep growing and reporting increased revenues each year.
Joe Average no longer trusts that market analysts are giving good advice, and the man on the street is convinced that accounting firms have been lying for years about the true condition of corporate books.
Companies run by the same types of Ivy-League Lemmings are in big trouble. They have taken on too much debt. They haven't trimmed enough of their upper management bloat. They've expanded through acquisitions that no one had any business doing, and their books are even worse than the public fears.
The real confusion comes into play, however, when one factors in that technology is now permitting smaller companies to compete on a level playing field with larger firms. No one knows how large your company might be when they see its web page, for instance. Everyone can afford the same technical wizardry, too.
So where is the money going? Into real estate. Into smaller firms with histories of paying strong dividends (can't fake dividend payouts with crooked accounting, after all because cash payouts to stockholders can't be "massaged" on the accounting books). Into metals, and even kept in cash.
So Wall Street is in for a bloodbath (at least for the most popular "growth" stocks).
But our economy is fine. Our economy is benefiting from low interest rates, low inflation, low unemployment, easy money, and high productivity. Banks, those ultra conservative, staid, traditional businesses - are expanding. They wouldn't be expanding if small businesses weren't making up for the losses in large corporations.
But all of these facts fly in the face of the well-ordered world that Wall Street once thought it controlled, so the power players are confused. They talk about market "capitulation" and how the great recovery is just about to hit.
Well, the recovery hit our economy, but that doesn't mean that it will hit our stock market. There are decades of hype, excess, fluff, inefficiencies, and bad debt out there to be cleaned up, not to mention that corporate accounting will either have to be cleaned up or else every firm that wants to be fairly valued will have to go to paying quarterly dividends (which can't be faked with cooked accounting books) to their shareholders.
How bad can things get? If you own "growth" stocks (which don't pay dividends and do rely upon investors believing their corporate accounting books), then things can get quite a bit worse.
These tribulations on Wall Street will even contribute to large firms accellerating their layoff plans.
On the other hand, if you are invested in small companies which are taking over the business dropped by these large, troubled firms, then the future looks pretty bright.
If you get your news and analysis from the status quo Wall Street types, however, you're wondering just how low it can all go.
And for them, things will be going pretty darn low...
