Paul Farrell on Wall Street Bullshit

Paul Farrell — who seems to be getting more and outraged every day — pulls a buncha quotes from the past to hoist on their own petards the bulls of yesteryear. Before you snicker, note that many of these same characters are rising once again again in the the public media.

Its not merely that they are wrong that so infuriates Farrell; its that they have been 1) wrong so consistently 2) by facing in the same Bullish direction, and that 3) this perma-Bullish stance serves their fee driven — rather than performance based — agenda.

Bennett Goodspeed, in his book The Tao Jones Averages, had a name for this group: "The Articulate Incompetents."

Here are my favorite half dozen selections:   

• October 1999: James Glassman, author Dow 36,000
"What is dangerous is for Americans not to be in the market. We’re going to reach a point where stocks are correctly priced, and we think that’s 36,000 … It’s not a bubble. Far from it. The stock market is undervalued." (Warning, don’t choke on your popcorn!)

• December 1999: Joseph Battipaglia, market analyst
"Some fear a burst Internet bubble, but our analysis shows that Internet companies account for only 7% of the overall Nasdaq market cap but carry expected long-term growth rates twice those of other rapidly growing segments within tech." (The Internet Index lost two-thirds in the next six months.)

• December 2000: Jeffrey Applegate, Lehman strategist
"The bulk of the correction is behind us, so now is the time to be offensive, not defensive." (That’s a sucker’s rally.)

• December 2000: Fed Chairman Alan Greenspan
"The three- to five-year earnings projections of more than a thousand analysts, though exhibiting some signs of flattening in recent months, have generally held firm. Such expectations, should they persist, bode well for continued capital deepening and sustained growth." (And the curtain opened revealing the Wonderful Wizard of Oz.!)

• January 2001: Suze Orman, financial guru
"In the low 60s here, I think the QQQ, they’re a buy. They may go down, but if you dollar-cost average, where you put money every single month into them, I think, in the long run, it’s the way to play the Nasdaq." (The QQQ fell 60% further.)

• April 2001: Abby Joseph Cohen, Goldman Sachs
"The time to be nervous was a year ago. The S&P then was overvalued, it’s now undervalued." (Unfortunately, the markets continued down for another 18 months).

If any of these so-called gurus had studied market history, they would have recognized how unusual the pricing of securities had become, how extended the Bull market was, and how potentially devastating any correction might be.

Forget timing the market perfectly — merely acknowledging the rapidly increasing risk would have at least sufficed.


B.S. is Wall Street’s official language
Funny how the bulls’ talking points are the same, cycle after cycle
Paul B. Farrell
MarketWatch, 5:27 PM ET Jul 3, 2006

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  1. Josh commented on Jul 6

    This is kind of like home builders now. Sure they look cheap, but you have to let the ever-increasing supply over hang work itself out.

  2. duncan Robertson commented on Jul 6

    these people you mention; they were lobbied (paid money) to say this crap; in order to sucker poor regular joe into buyinhg stocks at the top; at the top of the bull; and now they do the same at the tail on the distribution flag that has been waving since madrid bomd; as sure as night follows day; its a sing of the top of wave b; as strong holoder need to find gullible weakholders to park stock onto; the substantial trasfer is substantially complete

    figure far lower pircee into wave c; dow due deep south; under iraq invasion/intervention/democracy level that was start for wave b


    work on the real deal and know how you are going to get paid

  3. PC commented on Jul 6

    Goldman Sachs investment strategist Abby Joseph Cohen published a report saying oil, the Euro, and third-quarter corporate profits will prove to be “short-lived” worries. “The intermediate and longer-term view remains bright,” she wrote. – September 2000

  4. MASH commented on Jul 6

    What about Joe (bag of donuts) Battaglia.
    Talk about bullshit!!!

  5. Craig H commented on Jul 6

    Most (all?) of these equity pimps are still doing their schtick on TV. They’re still on CNBC and Fox pumping away every week, so I reserve my deepest scorn for the producers and TV executives who use them to bring in ratings.

    I’ll say one good thing about Abby Joe. I remember she told Ginny Sack’s clients ( I call GS that because they’re big, bloated and very well-connected) to sell stock in early 2000, but she turned bullish again way too soon… by about 2 years.

  6. Brian commented on Jul 6

    Battipaglia has been showing up on Kudlow a lot lately which is making me want to go 100% cash. At least there hasn’t been an Abby spotting.

    (PS: Kudlow’s show is great when he’s on vacation and Michelle Caruso something is hosting it).

  7. ss commented on Jul 6

    I could pull an equal number of “cult of the Bear” comments from Oct 2003….calling for Dow 5000, etc.

    Data mining is bullshit — period.

    Take a look at what insiders are doing:

  8. john commented on Jul 6

    First I drank the bull kool-aide and lost a bundle then I drank the bear kool-aide and stayed on the sidelines and gave up the opportunity to make some back.

    In 2005 I sat back and said – I need a rule – thus came Rule 1 – Nobody Knows Nothing (including me).

    I turned off crapvision, did away with all my investment guru advice, fired my broker and fund managers, and now I make a comfortable living riding the wave where it takes me. Whenever I am in doubt I simply refer to rule 1.

  9. laffingstock commented on Jul 6

    Re: “cult of the Bear” comments

    The bears are just wrong, or to early somtimes,
    but are not being paid to drive the market down.
    Whereas the deceptive crap we hear from the likes of
    those mentioned above is designed to keep the market
    afloat and unload to the uninformed.
    This is a huge difference!

  10. Ricardo commented on Jul 6

    What is more scary is that these “bull-market” hypers still find employment on Wall St. I guess there is a sucker born every minute. I also agree that Kudlow’s show is better with out Kudlow — that guy is one big ass who has nothing of intellect to share. All I hear from him is that capitalism is #1. Way to dig deep into the issues pal!!!

  11. Bob A commented on Jul 6

    Highly paid sales people all of them. The scariest part is some of them actually are convinced of their own BS. They call it ‘faith’. As in the case of Larry Kudlow. But most are just totally dishonest and know damn well the trading desks at their own companies are shorting and buying puts on the very stocks they are trying to convince the masses to hold on to.

  12. ss commented on Jul 6

    “The bears are just wrong, or to early somtimes,
    but are not being paid to drive the market down.”


    Do you think they come on bubblevision, so they can protect you from the evils of the market from th good of their heart? NO! They are talking their own book…just like the perma longs you’re bashing. Gimme a break. Anyone can data mine quotes to make any human look foolish (or genious).

    For me, I’m happy to swim against the tide of all the living room trader lemmings and their wall of worry.

  13. Frank commented on Jul 6

    I wonder how much of this reguritated crap is designed to bring in masses for website ad revenues and amazon commissions…

  14. Get commented on Jul 6

    Awesome post, Barry. Thx.

  15. Eric A. commented on Jul 6

    Has Suzie Orman been hyping the market at any time since that January 2001 quote? I’ve only seen her doing PBS pledge drives, donating her financial products to contributing PBS members and offering what seems to me like some pretty sound financial planning advice. The only thing I heard her say about the NASDAQ is that it would have to go up by (huge)% in order to return to pre-crash levels.

    Barry also seems to have found her advice to be sound:

    That linkfest refers to the following article by Suzie Orman:

    So she may have been wrong 5 years ago, but we may have to acknowledge that, quite possibly, at the present time, she deserves none of Farrell’s three complaints, nor the classification of “articulate incompetent”.

    She seems to me to genuinely care about the welfare of her clients and the public in general. This could be clever salesmanship, but I don’t get that feeling. Doing the right thing can also be good for business.

  16. vegaman commented on Jul 6

    A bit off topic but I just caught this headline.

    “WASHINGTON (MarketWatch) — The Federal Reserve can best help any unwinding of the enormous U.S. current account gap by keeping inflation in check and making sure the public remains confident that the purchasing power of the dollar will not “erode unexpectedly,” said Fed vice-chairman Donald Kohn”

    and on tuesday I posted this

    “Eer, I think true Blue was being sacastic. In my view the direction of the dollar will be purely driven by the momentum of the base rate spread between Fed Funds and other G7 central banks (the prime two being ECB and BOJ). Forward indicators of inflation (ECRI FIG) have peaked since Q4 2005 in the US but are still rising in Europe. So although I beleive inflation is in a long term secular upswing the signs are that we we are due a growth driven (or lack of) cyclical correction in inflation. Now REAL yields in Japan and Europe are much lower than the US, which implies that going forward the ECB and BOJ will narrow the rate gap ( to maintain their inflation fighting credibility versus FED) and therefore depreciate the dollar and inflate GOLD (for currency reasons and NOT inflation expectations). In this window I expect Gold to retest and fail at its 1980 high of $850 ish , obviously you would expect dollar depreciation to encourage the FED to raise rates just that little bit further than it needed to and that is where I suspect the risk of it going a little to far. But it will earn its inflation fighting stripes and I expect the $ to re-assert itself at the expense of growth. Commodities spend the following 1 year to 18 months consolidatating at 50% to 60% of their cyclical peaks until the FED turns on liquidity by cutting rates, but the curve will steepen rapidly as I don’t expect long rates to respond to easing as they have in the past given the still elevated value of commodities and non US$ currencies relative to the similar easing period 2001 to 2003. THIS IS JUST AN IDEA, ANY COMENTS?

    Posted by: vegaman | Jul 4, 2006 3:42:23 PM”

  17. KL2005 commented on Jul 6

    This is a post bubble world and we are all nervous ninnies.

    I think we continue to rally here for several weeks. After that, I just do not see a decline greater than 20 to 25% here If we get one at all. This should be followed by another up leg.

    So in my mind worst case is a short lived relatively mild bear market. The long run up side looks very good. Hey there are never any gurantees but things look good going forward to me, albeit with a few rough patches along the way.

    Bottom line the market goes up 2/3 of the time so it is better to be a perma bull than a perma bear if you do not own a crystal ball

  18. fedak commented on Jul 6

    Its hard to lump Suze Orman in with the rest of the perma-bull talking heads.

    She generally preaches sound personal finance management and doesn’t usually market time on her show. Her dollar cost averaging recommendation is, in general, good advice.

    Also to her credit, she’s been bearish on housing and frequently advises against folks getting into mortgages that they can’t actually afford.

  19. alan commented on Jul 6

    If the dollar goes down w/o an increase in the national savings rate, that will be inflationary. However, I do believe the savings rate would go up in the US if home prices and stock prices went down. If you don’t have it, you can’t spend it. But for business reasons, Wall Street and the bankers are loathe to see a dollar decline. These Wall Street “gurus” must continue to be well fed since anecdotally, I hear that houses are still rising in the Hamptons.

  20. Bob A commented on Jul 6

    How anyone could blow off taking 20-25% hit to their portfolio as no big deal is way beyond me.

  21. Bynocerus commented on Jul 6


    Had an appt just now with a guy who told me he thought a good return would be 5%/month. He said he’d read Mr. Glassman’s book and he thought Dow 36,000 was just too compelling to ignore.

    When I suggested to him that treasuries would probably be a better bet over the next few years (definitely not a client to talk about shorting with, even if he were inclined to consider it), he got this look on his face like I had lost my everloving mind.

    And this is a guy who bought very close to the bottom back in 2k2. Sheesh!

  22. Bynocerus commented on Jul 6

    Correction: Should have said this is a guy who WE(nothing to do with him) got in close to the bottom back in 2k2.

  23. hoody commented on Jul 6

    we’ll be saying the same about the real estate bulls 3 years from now.

  24. trader75 commented on Jul 6

    I find Paul Farrell’s outrage amusing. Not because it is wrong, but because it is so repetitive and pointless.

    Bertrand de Jouvenal observed that “A society of sheep must in time beget a government of wolves.” The exact same sentiment applies to Wall Street. Bullshit will not die because people WANT bullshit, they CRAVE it, they NEED it, they DEMAND it, and it always been thus.

    Glassman, Battipaglia, Kudlow… the names really don’t matter. These jokers are just filling a niche in the ecosystem. If they weren’t around, some other touter would step up. We heap scorn upon the touts, but do we ever think about why or how the touts get prominent position in the first place?

    There is no free lunch, but that is what the average individual wants. A chicken in every pot. Profits in every investment account. And no personal responsibility or accountability to go with. Wall Street makes big money selling sucker bait because THERE ARE SO MANY INCORRIGIBLE SUCKERS OUT THERE. Period.

    Sorry, don’t mean to rant. And I don’t disagree with Paul Farrell. But the finger pointing strikes me as utterly hypocritical. It’s bitching about symptoms rather than focusing on the disease. The disease is human nature, a willfully gullible public that constantly wants something for nothing. You want to change Wall Street’s culture for the better? Put the sucker-baiters out of business? The only way that happens is if the suckers wise up first. We’re a couple centuries and counting (think Mississippi company and South Sea Bubble), so I wouldn’t hold my breath.

    I also think Paul Farrell is a hypocrite because he is an index tout. This same guy who rants about tout bullshit is an active purveyor of Bogle Bullshit. Indexing is a great strategy in secular bull markets. It is a ticket to the poorhouse in secular bear markets. Yet Farrell has promoted the merits of blind indexing and Ibbotson type stuff many times if I recall correctly.

    It’s a tough world out there. I’ve noted the Bertrand Russell paraphrase on this site before, “Most men would rather die than think. In fact, they do so.” This applies very much to Wall Street. I don’t think guys like Paul Farrell and Ben Stein (another clueless commentator who does the outrage thing) actually help matters much.

    Sorry for the rant. The quotes are amusing and instructive. I just think we’d be better off focusing on our own deficiencies, and learning to become wise as serpents, as opposed to getting into the finger pointing outrage game.

  25. A Dash of Insight commented on Jul 6

    Paul Farrell on Wall Street Bullshit

    It’s fun to look up old quotes, especially the silly ones. I replayed a golden oldie today myself. But there is no comparison between 2000 and 2006 when it comes to market fundamentals of the economy and corporate profits. Those

  26. KL2005 commented on Jul 6


    If you can not live with a 20 to 25% blow to your portfolio than you can not live with a buy and hold strategy.

    Buying and holding a total market index out performs most market timers.

    Besides I did say short term bear as in 6 to 9 months. Additionally it may not even occurr or may not be that bad. Can you really time things that well?

    If I see it comming I like you would prefer to sell and avoid it, but if there is no reason to believe it would be very long or very deep, like the nasdaq bubble riding it out as oppossed to timining it is a very reasonable approach for many.

  27. trader75 commented on Jul 6

    KL2005, with all due respect and no animosity intended, in my opinion the thinking embedded in your recent posts is more dangerous than all the outrageous Glassman / Battapaglia / Kudlow pronouncements put together.

    Not trying to single you out here, but rather using your viewpoint as an example of widespread category error: instances in which the argument itself is not badly flawed so much as the thinking process behind the argument is badly flawed, and often distorted by rationalizations to boot.

    It is an unfortunate reality that technically true statements given out of context can do more damage than outright baldfaced lies. It is also frightfully easy to attach wildly inappropriate conclusions to technically correct observations, the equivalent of building a house on quicksand.

    Saying that it is better to be a permabull than permabear because markets go up two thirds of the time is an example of dangerous thinking. The false dichotomy also leaves out the fact that permabears and permabulls both get screwed in the long run and the only sane path is not to be a perma anything.

    Also alarming is the immediate juxtaposition of “X is better if you don’t have a crystal ball” alongside inflexible non-reality based predictions like “in my mind worst case is a short lived relatively mild bear market.” At least the “in your mind” bit is a somewhat truthful qualifier.

    It boggles my mind how many market participants actively trash logical attempts at forecasting and then go ahead and engage in illogical forecasting themselves. They contradict themselves at the most fundamental level but don’t bother thinking things through enough to spot the glaring problem. Anyone who says “nobody knows what’s happening” and then happily references some long-run bullish market study to justify their complacency is guilty of this.

    As one of the bad guys in the Matrix said, “buckle your seatbelt Dorothy cause Kansas is goin’ bye bye.” The last century has gone bye bye. We are going through a period of economic, technological and geopolitical upheaval so deep that all past precedents are out the window. And even in more rational times the conclusions derived from those soothing market studies were completely unjustified. Ibbotson offers no comfort to the retiree who hits a ten to twenty year air pocket just before retirement. We are not living in safe times. Rationalization isn’t costly when the sky is blue and the sun is shining. In dangerous waters it can get you killed.

    I am aware this is not a happy message. Unlike many of the commentators out there–present company excluded fortunately–I don’t feel any compelling need to shoehorn my views into an optimistic outcome. Is an optimistic outcome possible? Certainly. I’m no permabear. But the pre-existing requirement of an optimistic conclusion, the notion that there is a basic solution for all investors out there that does not require them to wise up or change, is part of the problem. Telling it straight and giving the people what they want are all too often at odds.

  28. ss commented on Jul 6

    “”buckle your seatbelt Dorothy cause Kansas is goin’ bye bye.” The last century has gone bye bye. We are going through a period of economic, technological and geopolitical upheaval so deep that all past precedents are out the window.”

    Interesting comments…however show me a period in history when the above was NOT true.

    Netflix just delivered Chicken Little…sounds like a good night to view it.

  29. babycondor commented on Jul 6

    trader75: “Wall Street makes big money selling sucker bait because THERE ARE SO MANY INCORRIGIBLE SUCKERS OUT THERE. ”

    Call them what you will, Bulls make money and Bears make money. It works (and has worked for over 100 years) because enough people make enough money enough of the time. It definitely beats playing the lottery, don’t you think?

    KL2005: nice to see a counterpoint to the pervasive bearishness on this blog. I think most here are traders. I’m a long-horizon investor, but find the views here interesting and instructive. In retrospect, it would have been to my advantage to “sell in May and go away” this year, even with transaction fees and taxes…but the year’s not over yet, is it? And I haven’t the discipline (or faith?) to attempt to time the market.

  30. trader75 commented on Jul 6

    Interesting comments…however show me a period in history when the above was NOT true.

    Not a doom forecast, just an observation of accelerated change. When you think about it, the 20th century was chock full of goofy anomalies. Why should 20% of the world have all the wealth while 80% had none. Why should one country have the vast majority of opportunity while everywhere else was a backwater. Anomalies we took to be permanent are showing themselves to be just that, multi-decade anomalies. This is a neutral observation, it doesn’t have to be charged with euphoria or despair.

    Things are the same because things are always changing, yeah. But the process of change is not kind to those who are heavily relying on yesterday for a roadmap. And the upheaval process is rarely pleasant.

    As I said, I’m neither permabull nor permabear. Nor am I default pessimist or default optimist. I guess you could call me an upheavalist. There are some incredible opportunities out there but some big risks too. One clear trend I see is that those folks relying on a free lunch are going to get served. But not in the way they would like.

  31. jkw commented on Jul 6

    According to my Monte-Carlo simulations, the only thing that determines your returns is what % of the time you are right about the market direction. On a daily basis, the market is about 52% up and about 48% down (I don’t remember exactly what time period this study was done on, but I think it was about 1983-2004). So a permabull gets an effective return of about 4% of the theoretical maximum. A market timer that can correctly predict the market direction 60% of the time and is always either long or short will get a return of 20% of the theoretical maximum before expenses. This is 5 times better than buy and hold, so it will be better even after expenses.

    During a secular bear market, the market is up and down the same amount. Which means the expected return on buy and hold is 0%. You’ld be better off putting your money in the bank. Until the secular cycle shifts, you should either sell and leave your money in cash or learn how to time the market. Secular markets shift slowly and are not too hard to time. Look at a stock chart going back 70+ years that has good indicators and watch those indicators for when the next secular bull market starts. Don’t worry about missing it by a year or two. Secular bull markets tend to have a return of about 1,000% over 15-25 years. Missing a year on both ends will drop that to about 700-800%. Secular bear markets tend to have a return of about 0% over a period of 10-15 years. If you can get 5% for your cash during that time, you will have a total return of 50-100%.

    Timing the market well on a daily chart basis should get you a return of about 10-50% per year. It is slightly higher in secular bear markets because the increased volatility will provide more profit opportunities.

  32. trader75 commented on Jul 6

    Call them what you will, Bulls make money and Bears make money. It works (and has worked for over 100 years) because enough people make enough money enough of the time. It definitely beats playing the lottery, don’t you think?

    There are too many assumptions, misconceptions and hidden points of debate in that post for a short reply to suffice.

    Not that I’m even sure what you’re trying to say; I certainly didn’t intend to suggest that investors should give up investing. I just think flexibility and critical thinking skills are more important now than ever.

  33. babycondor commented on Jul 6

    “I just think flexibility and critical thinking skills are more important now than ever. ”

    Agreed, and thanks for clarifying.

  34. babycondor commented on Jul 6

    jkw, thanks that’s very helpful.

    So, if the current secular bear began in 2000, we are six years into it. If cycles of change are accelerating as trader75 suggests (and I agree), then perhaps the old bear is getting ready to go into hibernation. The interesting question is what will be the catalyst for this shift? It might be an event not predicted by charts or data, that would catch everyone off guard.

  35. ~ Nona commented on Jul 6

    Trader 75, how about describing yourself as a realist who recognizes upheaval (aka ‘accelerated change’) to be an important, sometimes significant factor, to consider. “Upheavalist” sounds reactionary, which, IMHO, is another form of non-critical thinking.

    I would never describe you as a non-critical thinker.

  36. whipsaw commented on Jul 6

    As Barry has pointed out on several occasions, buy & hold can work during a secular bull, but not during a secular bear. I lean towards the idea that the market is not actually trending 80% of the time, but is range trading with an upward bias during a secular bull and a downward bias during a secular bear. You can certainly make money playing cyclical swings against the secular, but I don’t think that you can successfully just ride things out on the wrong side for a decade or more. 20-25% drawdowns are not acceptable in my book even if they are eventually erased.

    My take on the prevalence of bullish talking heads is that a) it is hard to sell bad news and b) their employers directly benefit from talking things up. I don’t think that it is a waste of time to recount their past sins since there are people in the market now who are not aware of how inept and disingenuous these folks are. Nothing is going to change, but at least some 25 yr old kid who has just begun to invest
    has the opportunity to avoid being hornswoggled by The Man On TV if he bothers to look around some (google is your friend, even if GOOG is not).

    My personal outlook is for things to bottom out Sept/Oct, rise into Jan, then go down hard in March when I will whistle up the dogs and head for the truck. I’ll look things over again next September, but otherwise I doubt if equities are on my menu.

    Disclosure: I have March07 SPY puts, otherwise money market, CDs, and bonds (that I’ve had for years).

  37. Guy commented on Jul 6

    This post definitely helps frame the argument about whether stocks are fairly valued. I re-read the post about P/E compression and I’m leaning toward that line of thinking.

  38. rick commented on Jul 6

    some of those perma-bulls should be ashamed
    of themselves, I am not so sure bulls or bears make
    money all the time, If you followed some of them,
    say from 2000 on, you’d be poor.

  39. Ralph commented on Jul 7

    That Suzie Orman quote on QQQ was a doozie. I still remember it though it was 5 years ago. And how can I forget Joe Battapaglia and Abby Joseph Cohen. I remember talking about Joe the Bull to my stock broker just before I sold all my positions in April 2000.

  40. The Big Picture commented on Jul 9

    Those who know do not speak, those who speak do not know.

    This seems to be Paull Farrell appreciation week at the Big Picture. I sense his frustration levels are increasing as he continues to rail against some of the absurdities of Wall Street. Paul, you better watch out or you may become victim of the Cassan…

  41. A Dash of Insight commented on May 7

    Paul Farrell on Wall Street Bullshit

    It’s fun to look up old quotes, especially the silly ones. I replayed a golden oldie today myself. But there is no comparison between 2000 and 2006 when it comes to market fundamentals of the economy and corporate profits. Those

  42. Roberto commented on Nov 6

    It is funny that you will not find Buffett’s quote on the list of stupid quotes.

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