Truth Or Skepticism: Bull Market Fallacy
Jul 24, 2015
By: Mike Butler
Tom & Dylan reunite for another segment of Truth Or Skepticism! On this episode, the guys discuss the recent spike and decline of volatility, and how this market is in a weird place. Jumbotron stocks are exploding from earnings announcements, but executives of some of those very same companies are selling their shares of stock. What gives? Check out the preview of the full segment below!
Tom & Dylan are perplexed by the huge moves in jumbotron stocks. Tom believes it is more of a bubble situation than anything, and believes over time these stocks will come back to earth and normalize. It just adds to the list of red flags he sees in this bullish market, and gives him even more reason to be short.
Dylan compares the VIX to a high performing car. It revs up quickly, and revs down just as quickly. They discuss whether this is an effect of complacency, or if it is just a normalized asset. Tom believes it is a normalized asset.
Tom & Dylan discuss the bull market fallacy, and how it seems that the dumber you are, the better you perform. ETF’s have been ripping up consistently, and leading people to believe that what goes up, must not come down. Dylan ponders on a potential safe haven play, and asks why that is not getting long stocks like GOOG, NFLX, etc.
Dylan wonders how buybacks and dividends affect the future of companies today. Tom is worried that if there are not deals that can be made to improve / shift business, things are either overpriced or the model has changed so dramatically that you have to buy things for the future.
The guys finish off this segment by discussing China, and the interesting turn of events that have played out over the past few weeks. Tom is interested to see just how much more they can pump into the economy, as they have already pumped a couple hundred billion into it. Dylan spins the question into a comparison of what’s scarier - the thin ice China is on or the passive American investor?
To see earlier episodes of Truth or Skepticism with Dylan Ratigan, you can watch them here on the tastytrade archives!
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