This morning’s key headlines from GenerationalDynamics.com.
- Wharton School’s Jeremy Siegel is lying about stock valuations
- Spectacular missile failure makes North Korea very dangerous right now
- Syria violence is lower than before on second day of ‘truce’
- U.S. sends nonlethal aid to Syria’s opposition groups
Wharton School’s Jeremy Siegel is lying about stock valuations
One thing I like to do every now and then is to highlight a politician or journalist or analyst or professor going on TV and blatantly lying.
On Friday, it was “well respected” profession Jeremy Siegel of the Wharton School, lying about stock valuations (price/earnings ratios). Here’s what he said on Bloomberg TV (my transcription). He’s making a prediction that stocks will surge to Dow 15,000 or even Dow 17,000 within the next two years, and he was asked why:
Oh, valuations. very persuasive valuations right now. P/E ratios are below the long run average. That’s quite remarkable in this environment. …
[P/E ratios are about] 13, which means that [stocks] are earning 7-8% right now, even without an earnings increase. You need strong earnings increases when the market is selling at 20 p/e ratios, or 25 — those growth stocks need them. At these valuations, modest increases are more than enough to beat any fixed income asset that’s out that there.
Well, “well-respected” professor Jeremy Siegel was simply lying. On Friday, according to the Wall Street Journal, the P/E ratio index is at 16.26. A year ago it was 17.81. Both figures are far higher than the “long-run average,” which happens to be 13.91.
So Jeremy Siegel was lying. Why would he lie? Because everybody lies these days, ever since the Gen-Xers started running everything a few years ago. There’s no downside to lying, because nobody calls anyone out for lying, or for being a crook. (I call people out all the time for lying, but no one gives a shit about that.)
Since Siegel is a “well-respected” professor. I assume that he’s a consultant for some hedge fund or investment house who pay him to lie on CNBC and Bloomberg TV, so he trades on his “well-respected” reputation to make himself and his clients a lot of money.
People lie constantly on CNBC and Bloomberg TV in order to justify their 7-digit incomes. One reason I like to focus on price/earning ratios is because it’s so easy to prove that they’re lying. I quote what they say, and then I quote the Wall Street Journal from the same day. Other people whom I’ve spotlighted in the past include Ron Baron, chairman and CEO of Baron Capital, Abby Joseph Cohen, head of Global Markets Institute Management at Goldman Sachs, Hank Smith, the Chief Investment Officer of Equity for Haverford Quality Investing, and Charles Bobrinskoy, Vice Chairman, Director of Research, Ariel Investments.
Are all of these people crooks? It depends on what you mean by “crook.” It’s true that they openly lie to defraud investors, but that’s the norm today. Can someone be a crook if being a crook is the norm? I don’t know the answer to that question.
Spectacular missile failure makes North Korea very dangerous right now
The North Koreans had invested a great deal of prestige in their long-range missile test. They invited dozens of international reporters to witness the event, timing it to coincide with the huge celebrations for the 100th anniversary of the birth of North Korea’s founder, Kim Il-sung. The North Koreans wanted to prove to the world that they were an important, sophisticated nation. So the failure of Thursday’s launch with the whole world watching, with the missile disintegrating into debris falling into the sea within a minute or so of launch, has got to be a humiliation of historic proportions for North Korea. Many analysts consider North Korea to be particularly dangerous right now, because the new leader, Kim Jong-un, may feel pressured to take some step that he thinks might restore the nation’s prestige. There might be new nuclear tests, or there might be another military strike at South Korea, such as the two military strikes that occurred in 2010. The long-range missile test violated United Nations Security Council resolutions, and so one outcome of the failed test is that the Obama administration has canceled its offer to provide food aid to North Korea. LA Times
Syria violence is lower than before on second day of ‘truce’
Syria’s Bashar al-Assad regime appears to have passed a big test on Friday, when thousands of demonstrators poured out of mosques after midday prayers into the streets to protest the Assad regime, and “only” a dozen or so of the protesters were killed by regime forces. This is considered to be “good news” for Syria, after the massive slaughters that occurred every day in past months. The United Nations Security Council is expected to vote on Saturday for unarmed U.N. observers to enter Syria to watch for violence. BBC
U.S. sends nonlethal aid to Syria’s opposition groups
The U.S. has begun sending promised nonlethal aid to the Syrian opposition, most of it medical and communications equipment. The supplies are going to nonviolent, political groups based on what they said would help them organize their efforts and provide aid to civilians, and the aid is likely to increase. Bloomberg