Chicken Little on Wall Street

The Volatility of the Stock Market Says a Lot About the Average Investor

The Volatility of the Stock Market Says a Lot About the Average American Investor

Today I will be wearing a slightly different hat. As part of my retirement plan, I maintain a pension account containing stocks and mutual funds. I am fascinated by the way the market goes up and down, with jagged swings indicating that “Yes, the sky is falling!” and, alternatively, “No, it isn’t!”

Last week, analyst Kevin Kaiser of Hedgeye Risk Management released a report promising juicy details about mismanagement by the partners of Kinder Morgan (KMI), a publicly traded energy pipeline partnership. The stock of KMI suddenly dropped by 6%. Then the report came out, and it was the Emperor’s New Clothes all over again. Kaiser’s big point was that the firm was stinting on capital expenditures for maintenance of the extensive pipeline network. When the industry had a chance to read the full report, the scorn started flowing. It turned out that KMI spent as much on pipeline maintenance as any of the other firms in the industry, and that therefore Hedgeye was full of pungent excrement. Still, the investors in the marketplace are so timid that the stock has not yet fully recovered from last week’s drop.

Another case in point: American Tower Corporation (AMT) was attacked by Muddy Waters Research (an appropriate name), which claimed that “American Tower is worth 40 percent less than its share price because it overstated the value of its acquisitions and has poor corporate governance.” Predictably, AMT stock slid by several percentage points, until Deutsche Bank came to the firm’s rescue by asserting that Muddy Waters was merely muddying the waters.

If weird hedge fund analysts could do so much damage, I would like to put in my own two cents worth, in the hopes that the stocks of the following companies would take a tumble:

  • Halliburton Company (HAL) has been sexting pictures of their CEO’s private parts to underage schoolgirls across the United States.
  • Monsanto Corporation (MON) has been transporting young boys across state lines for various nefarious purposes.
  • Koch Industries, Inc. (Unlisted) has secretly been funding a political attempt to implement Obamacare and paying off Tea Party members of Congress to be absent when votes attempting to repeal are introduced.

Why am I in the stock market at all? With all its vagaries, it’s still better than the 0.0000001% interest offered by most banks.