August 2022
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August 8, 2022

Financials Matter

"It's Not Just About Finance"

Why You Should Never Fight the Trend

Last month I wrote about “The Trend is Your Friend, Until it Isn’t.” (HERE).

In that email I told you how the boyz in the “Club” move in anticipation of events.

They understand trends and use their media presstitutes to convince you to do the opposite of what they do.

It’s called “The Greater Fool Theory.”  (And you can read more about it in the November Issue of Simplifying Wall Street in Plain English.  HERE)

Most of it has to do with following trends and why you should never fight them.

A classic example of this happened last week when Caterpillar (CAT) hit an all-time high after announcing their earnings.

On paper, CAT’s earnings seemed impressive.  But the reality is, prior to this report, they’ve had 51 consecutive months of declining sales.

Think about that for a moment.

How can any stock go up when their sales/earnings have been declining for over 4 years in a row?  (Can you say “cooking the books?”)

Many analysts have highlighted CAT’s losses and made compelling cases as to why you should not own CAT.

However, over the last year, the trend has proven the analysts wrong.

CAT investors have seen a return of over 65%. (Last November it was 82…today it’s over 137)

This doesn’t make the analysts wrong.

It just proves why you should never fight the trend.

CAT is only one example of how companies defy logic by playing with the numbers to make their earnings look good.

The trend is still on the upside…but for how long?

I don’t have time to give you all the details in this email, but eventually all trends reverse.

Stay ahead of the curve…and find out how (HERE).

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