Another Goldman Sachs Idiot

In the echo chamber, people in Wall Street fail to realize that Wall Street does not exist unto itself. Production, profit, and economic growth does not come from that sliver of land we bought from the Indians 250 years ago for a couple of beads. The prices and values of the stocks they trade and see every day in the NYSE are not representative of the productive efforts of the bulge bracket.

No, Wall Street and all the kerfuffle that surrounds it exists ONLY because THE REST OF THE COUNTRY PRODUCES THE WEALTH BY WHICH YOU CAN SECURITIZE THAT WEALTH AND TRADE IT AND CHARGE YOUR PRECIOUS LITTLE COMMISSIONS.

It's not "Lance Winthrop" blue blood nepotist of the P&G empire and graduate from Harvard's Business School producing the wealth.

It's not "Chip Rockefeller" trust fund baby extraordinaire and NYC socialite who works at Morgan Stanley's M&A division.

It's Bob Jones, farmer who produces food every day, or Jill Johnson chemist who develops new drugs to treat cancer, or Mike Malloy who builds industrial machinery that produces the wealth.

This they do not understand.

So it should come as no shock that another Goldman Sachs "expert" claims US equities are the best priced they've been in a generation. Never mind trillions of dollars in retirement dollars has effectively made the US equities market a bubble for the past generation. Never mind the P/E ratio is still about 20-25% over its historical average. And never mind the dividend yield is squat (point duly noted about stock repurchases). Set these legitimate criticisms aside. He's erring in another area, namely, ignoring the rest of the country.

I'm sure an overpaid Ivy League blue blood employed in the echo chamber of Wall Street can't understand why people aren't buying stocks. But if he were to come to the west side of the Hudson and maybe a couple hundred miles inland, he might realize that (much like the housing market), people can't buy stocks if they don't have the money.

Yes, ignore the macro-economy, ignore unemployment rates, ignore disposable income figures, ignore income per capita, ignore the private and public debt-loads and just sit there and wonder why aren't these stupid people just gobbling up stocks?

I'll cite Zero Hedge again in its spectacular observation of the declining trading volume of the US stock markets. I'll also make it simple for you East Coasters who seem to think the remaining 49 states have nothing to do with those numbers flashing up on the trading boards:

1. The country is poorer.
2. Nobody has faith in the future of the country
3. More people are suspicious of whether or not their retirement plans will be confiscated
4. People just plain don't have the money to buy stocks
5. And if they did, why would they invest in an inflated market anyway?
6. Let alone in equities based in a country that is seemingly hell-bent on becoming a socialist state?
7. And dare I suggest the financial services industry has earned itself a craptastic reputation and most people just plain don't trust you?

You crazy hip cats on the coast keep trading amongst yourselves. Ask Dick Fuld how well ignoring cash flow and profits works as an investing strategy.