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More on the carnage in financial markets

18 September 2008

This has been the easiest week in the history of my job at Investor’s Business Daily, which has spanned nearly a decade. There’s been so much horrifying news coming out of the financial sector, and the stock market, that it’s made my daily column, “The Big Picture”, a breeze to write. (By contrast, writing during the week between Christmas and New Year’s, where not a creature ever stirs, is always a tough task.)

One of the central tenets of IBD-style investing is that you can, in fact, time the market. For instance, when the market went from the greatest bull run of all time in the late 90s to the worst bear market of all time from 2000 to 2002, I lost exactly zero dollars and zero cents. Sure, I didn’t make any money. But because I cashed in all my stocks right as the market peaked, I avoided the disasters that many people I know suffered through when they, say, rode Nortel from $100 a share down to $2. Learning to read stock charts can be a powerful tool that way.

I also learned to never, ever trust market advice. Not stock tips from friends and colleagues, not touts by analysts, and especially not gushing promises of wealth from the charalatans who run financial magazines.

One of my favorite aspects of writing for IBD used to be writing the daily advice column, “Investors Corner”. Never more so than when I’d be assigned to write about how full of crap those financial magazines are (analysts too, but that’s a story for another time). In an attempt to cozy up to powerful CEOs, mags like Forbes, Fortune and others constantly publish lapdoggish articles on big companies, touting their stocks as sure things.

These picks are so egregious, that IBD came up with an investing strategy to account for magazine coverage: Do the exact opposite. Meaning if you see the CEO of Amazon on the cover of Money, don’t buy Amazon. In fact, sell it. Actually, check that. Short that f’ing stock, hard.

It’s against that backdrop that I was delighted to see another publication, one that rarely takes on stock market topics, come up with some great petard-hoisting. Gawker, a site that’s typically known more for doing things like publishing Sarah Palin’s private e-mails, has a great piece out on the terrible touts made by some of the biggest financial mags in the business. Specifically, these touts cover companies like Merrill Lynch, Lehman Brothers and AIG, casualties of the liquidity crisis whose stocks have completely collapsed, wiping out kajillions in investor equity.

Check it out here. Guaranteed to make you angry.

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