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Friday Charts: Hype, the Stupidity of Crowds and a Thief That Robs Us All

If you’re a newbie to the Wall Street Daily Nation, you’re in for a real treat.

Each Friday, I try my darndest to zip my lips and let some carefully selected graphics do the talking for me.

This week, I’m dishing on Twitter’s highly anticipated (and highly overvalued) IPO, the stock massacre that wasn’t and a thief that robs us all.

Pictorial enlightenment begins in three, two, one…

The Tweet Heard Round the World

Social media mania is heating up yet again. And all it took was 135 characters (including spaces) to do it.


And now inquiring minds want to know: Will the Twitter IPO be hot or not?

Well, as I’ve said countless times before, IPO performance always comes down to valuation. (Remember Facebook (FB), anyone?)

One look at this chart should immediately dampen any rational investor’s expectations.

If you still can’t resist the temptation to buy into the hype, at least be smart about it. Check out my colleague Marty Biancuzzo’s latest piece here. He ferreted out two less-risky ways to get a piece of the action.

Rest assured, I’ll be providing more analysis on Twitter’s upcoming IPO in the weeks ahead, too.

A Double Whammy for Market Pundits

So, yeah, that whole September taper thing that everyone expected to be announced Wednesday? It didn’t happen. (We told you so.)

And that thing about September being the worst month for stocks? Yeah, it doesn’t appear to be happening, either. (We told you so.)

So far this month, the S&P 500 Index is up 6.48%.

On a sector-by-sector basis, cyclicals are outperforming the S&P 500 Index. (The energy sector is the lone exception.) Whereas defensive sectors are underperforming the market. Take a look:

As Bespoke Investment Group notes, the discrepancy is “typical in a strong market.” Indeed!

If you’re putting new money to work, buy into the strength by finding undervalued opportunities in the best-performing sectors. If you need help, we’re here for you.

Use Protection

Rich or poor, old or young, inflation is the thief that robs us all. And a new chart out from BlackRock demonstrates how costly even moderate inflation can be.

A mere 2% bump in inflation rates can mean the difference between eroding 52% versus 70% of our wealth over time.

Inflation might not be at the top of everyone’s worry list right now. But it’s going to be eventually, given that the Fed is dead set on printing money into eternity. So a little gold could go a long way to protect us.

That’s it for this week. Before you go, though, let us know what you think of this weekly column – or any of our recent work at Wall Street Daily – by going here.

Ahead of the tape,

Louis Basenese