The Biggest Con of the Last 10 Years, Finally Busted!

by Louis Basenese
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The Biggest Con of the Last 10 Years, Finally Busted!

The Biggest Con of the Last 10 Years, Finally Busted!

It’s Friday in the Wall Street Daily Nation!

That means the longwinded analysis is out. (Hallelujah!) And some carefully selected charts are in.

So without further ado, check out these snapshots on the most shocking truth about the economic recovery, the difference between a recession and a depression, and why the laws of the market always get enforced.

Recovery? What You Talkin’ About, Willis?

Ready for a shocker?

A Washington Post-ABC poll from December 19, 2013 shows that – get this – a staggering 79% of people still believe we’re in a recession.

So either they didn’t get the memo from the NBER that the recession officially ended in June 2009, or they’re clueless, right?

Maybe not . . .

This chart of corporate profits versus median household incomes reveals two shockingly different economic realities.

While the average American corporation has enjoyed a massive rebound in net income, the average American has not.

Now, I’m not even remotely suggesting that corporations need to “share” the wealth a bit more. Don’t go there, people. I’m just making an observation and providing some perspective.

Speaking of perspective . . .

The Great Recession Wasn’t So Great After All

If I only had a dime for every person who swears that the Great Recession was nearly as bad as the Great Depression.

It wasn’t even close!

At least, not based on the analysis by Harvard professors, Carmen Reinhart and Kenneth Rogoff, in their paper, Recovery from Financial Crises: Evidence from 100 Episodes.

During the Great Recession, real GDP per capita fell only about 5% from its previous peak. During the Great Depression, it plummeted nearly 30%. (Yikes!)

Keep that in mind when your great-grandkids start asking you what it was like to live through the Great Recession. That is, if you can still remember anything at that age.

Forget Crack . . .     Hype Kills

Boy, what a difference two months make!

You’ll recall, heading into Twitter’s (TWTR) IPO in November 2013, every single analyst who issued a pre-IPO report rated it a “Buy.”

Fast-forward to today, though, and they’re all scrambling to downgrade the stock. What gives?

I’ll tell you . . .     The hype wore off, and they actually started crunching some numbers.

And whether we value the company based on its sales or profitability, overwhelming evidence indicates that the stock is ridiculously overpriced.

I vaguely remember someone warning about this before, don’t you?

In any event, Business Insider’s Jay Yarow does make a valid point: “This doesn’t necessarily mean Twitter’s stock is going to crash. Some companies can defy the laws of valuation. (See: Amazon.)”

But if you’re willing to make that bet on Twitter with your hard-earned capital, a sucker must truly be born every minute. Because, eventually, the laws of the market always get enforced.

So it’s only a matter of time before Twitter – and for that matter, Amazon (AMZN) – gets crushed.

Disagree? Then tell me why here. While you’re at it, feel free to share any other comments, questions, or biting criticisms you have about our work here at Wall Street Daily.

Ahead of the tape,

Louis Basenese

The post The Biggest Con of the Last 10 Years, Finally Busted! appeared first on Wall Street Daily.

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