Use your charts to make money, not a crystal ball... May 7, 2015 Archives | Unsubscribe Meet Janet Yellen, Stock Market Psychic Use your charts to make money, not a crystal ball Can the Fed really time booms and busts? Plus: Cutting the cord, part 2 Greg Guenthner coming to you from Baltimore, MD... Janet Yellen has a crystal ball. And she sees trouble ahead... Yellen warned the investing public yesterday that stocks and bonds look risky in this ultra-low interest rate environment. But as you'll see, Ms. Yellen's crystal ball is notoriously foggy...and we might even make our money by ignoring her fortunetelling... "In a conversation with Christine Lagarde, the managing director of the International Monetary Fund, Yellen said that equity market valuations were 'generally quite high' and that 'there are potential dangers there,'" MarketWatch reports. (Gee, if only we knew who was responsible for this low-rate environment. They spike the punchbowl then blame investors for drinking it. But never mind that...) Now, this ain't Yellen's first shot warning about investor exuberance. Let's take a look at psychic Janet's last attempt and see what happened. Back in July 2014, the great seer told us this: Valuation metrics in some sectors do appear substantially stretched--particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year. Since she brought up those lofty stock prices last summer, I figured we'd check in on a couple of those high-flying names she predicted trouble for: Oops. I guess expensive can get more expensive. Maybe Miss Janet's future as a 1-800 psychic is in doubt? So what about her latest warnings about investor exuberance? What the heck are you supposed to do with these new comments? Let's check the history books. That's where you'll find the Fed's not-so-stellar track record when it comes to timing these booms and busts. Remember, Greenspan delivered his "irrational exuberance" speech in late 1996. The speech happened after the Nasdaq had jumped 74% in two years and hadn't seen a 20% decline in more than six years. We know what happened next of course. The Nasdaq dropped initially after Greenspan's comments, only to soar to new highs and climb more than 50% through mid-1998. Back to the present: Chief Yellen has obviously been too busy looking into that murky crystal ball of hers to look at a chart lately. Because if she had, she'd already know that biotech, social media, and other high-flying stocks haven't exactly seen a lot of irrational exuberance recently (we've been all over some of these recent disasters as recently as Tuesday). The lesson of course is to keep a close eye on the trends--not market comments from the Fed, which can be anything but accurate. In fact, I recommend completely ignoring anything they say. It just won't help you make money trading--that's a fact. Introducing… Jim Rickards' IMPACT System IMPACT is the only way we've ever found using back-tested data that could have allowed you to profit an extraordinary 1,246% (or more) from currency wars… using the same secrets Jim Rickards developed for the CIA to predict terrorist attacks. See how IMPACT works here… Rude Numbers When to Buy... When to Sell 86 points dropped off the Dow Jones Industrial Average yesterday. The big board is now hovering right near breakeven for the year... $60.92 buys a barrel of crude today. Oil is hanging onto its big gains as we approach the end of the trading week... $1,181 is where you'll find gold futures this morning. The yellow metal is down about $8 in early trading... $16.24 is where you'll find silver futures today. The poor man's precious metal is down more than 1.6% to start the day... 2,071 marks the spot for S&P futures just before the morning bell. Stocks have climbed out of a big hole so far today... Rude Trends When to Buy... When to Sell "Sir, I enjoy my cable," a reader says regarding our "cut the cord" rant from yesterday. "I have the basic package, without the box, and have all that is necessary for TV viewing. Sounds like you may be spending too much time using your remote rather than enjoying all the activities that this one life provides. Doesn't sound like you are lazy, just inert!" Well, I don't have cable at all. I actually cut the cord a couple of years ago. The only thing I miss is live sports. But hey, that's what the pub is for, right? Not sure why you consider me "inert" because I pay $8 a month for Netflix, though... Who's next? "I for one, don't particularly want to watch Seinfeld reruns. But cutting the cord may be possible soon," says another reader. "I mostly watch the major channels. I live in an area where I could get them with an antenna. I get Pandora radio through Direct TV. I could feed it from my computer to my computer with a $35 device. The problem I have is an addiction to the Golf Channel. I don't know how to get it without paying for the extra package along with the basic service on Direct TV. The cable and satellite services may be able to survive with the offering of a la carte programming." Yeah, the only problem with traditional a la carte is that it would be too expensive. The reason cable packages are so cheap relative to the amount of channels you get is because they figure you'll probably flip to something, anything if "nothing's on". It increases viewership across the board--and leads to more ad money. But yes, I think we'll see more popular networks like HBO begin to offer a streaming-only option. If you're producing quality stuff, people will pay to watch it. [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] Ignore At Your Own Peril Today's Must Read Links Six Investment Opportunities Obama and the IRS Can't Touch How to Get Anything You Want for Free -- Or Pennies on the Dollar The One Retirement Plan Obama Can't Touch BE SURE TO ADD rude@agorafinancial.com to your address book. Additional Articles & Commentary: Join the conversation! Follow us on social media: The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Agora Financial delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from The Rude Awakening, click here. Please read our Privacy Statement. For any further comments or concerns please email us at rude@agorafinancial.com. 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