Is Stock Picking a Dead Art?
Brittany Stepniak

There seems to be a dark gray cloud looming over investors in America's economy lately. Even the rare ray of sunshine appearing during moments economic optimism is quickly overpowered by that gloomy cloud of uncertainty.

It's no secret that current conditions are grim but James Bianco, president of Bianco Research LLC, says that the situation won't be easily remedied...especially since people have lost all power to control the economy.

These days, the markets aren't controlled by corporate executives and their companies. In today's financial realm, Ben Bernanke has acquired all the power.

MarketWatch put it rather bluntly: “It's Ben's world, and we're just investing in it.”

When MarketWatch interviewed Mr. Bianco, he explained how detrimental it is that Mr. Bernanke is running the show in the post-crisis environment we're living in today. “Stock picking is a dead art...The most important man in investing decisions is Ben Bernanke. It shouldn’t be, but it is.”

As the Fed enacts the most extreme policy its ever implemented, Europe is taking drastic actions too. Those actions affect all individual investment decisions.

Bianco goes on to announce his belief that the Fed well go forth with further quantitative easing before summer's here. While that is expected to bring some gains to stock prices, Bianco encourages investors not to get too excited: “these gains will be fleeting,” he says.

As part of his defense strategy, Bianco dropped by MarketWatch to give him the 5 money moves he'll be taking to protect his investments:

1.) Go easy on stocks

Without strong earnings and positive growth trends, equities can't thrive. Right now, there simply isn't any stable growth in the equities markets – at least not enough to satisfy frantic investors.

“I’m worried that the stock market has been manipulated higher,” he said. “We have had a rally produced by policy out of the Federal Reserve.”

More disturbing, Bianco said, is that the U.S. market rally hasn’t created a wealth effect that fills corporate coffers and encourages retail investors to buy stocks through mutual funds and other avenues.

It's certainly not a pretty situation and the chances that Bernanke finds a solution any time soon are slim to none.

2.) Don't be so quick to sell those Treasurys

Treasurys, on the other hand, are more appealing to Bianco. He seems quite sure that the Fed will continue to buy Treasurys. This may sound surprising since so many other investment advisers have been warning that the Treasury bubble is about to burst...

Bianco explains it like this:

“This is the environment we’re in right now. It should not be this way, but it is,” he said. “There is no value in [Treasury] bonds; there hasn’t been value in bonds, but would I sell bonds? Would I be afraid to lose money? No. The Fed won’t allow that to happen.”

3.) Don't fall for corporate bonds

In attempt to eliminate as much risk as possible, many investors have flocked to bond mutual funds and exchange-traded funds. Corporate bonds are especially appetizing when equities carry so much risk...but they still carry great risk as they are exposed to “interest-rate fluctuations and the stability of the issuer.”

4.) Avoid Europe, set sights on emerging economies

Europe is so damaged right now, it'd be foolish to put any substantiated faith in it. Instead, emerging economies (except China) are looking more attractive. They simply don't have the fiscal woes and associated problems of developed nations in the Western world.

5.) Gold still shines brightly

I think any investment strategist would agree with Bianco here. Investors are still seeking safety in the precious yellow metal. No matter how policy makers manipulate markets, how steep inflation rates rise, or what crisis may ensue this year gold will hold strong as the anchor of stability.

“Gold is the place you put your money when you have lack of faith in the financial system,” Bianco said. 

Bianco closes his argument with a plea for free markets: “If we were to try capitalism, I would be a lot more bullish.”

Born in Upstate New York, Brittany Stepniak actually spent most of her life in Southwest and Central Virginia where she attended Roanoke College – a private, liberal arts school.

Working on various research projects with a diverse group of professors, doctors, and scholars from various regions of the world, she studied the inner-workings of everything from literature, humanities, religion, psychology, biology and neurology to understand how those aspects blend together to mold the trends of modern day society. Her unique experiences have given her an in-depth understanding of "the big picture". Her current focus lies in the examination of financial trends within the global economy and the related socioeconomic impacts of politics and legislation.

Her published works include a variety of magazine articles, blogs –relating to finance, science, technology, energy, politics, and health–, scholarly Shakespeare research, and a bit of poetry.

Her education, publishing experience, and financial interests led her to Baltimore, MD as an editor for Wealth Wire. Brittany reports on the most up-to-date precious metals research, oil developments, economic predictions, and stock market volatility. She is also a contributing writer for Green Chip Stocks.

www.wealthwire.com