This article first appeared over a year ago, on February 8, 2016, but the teaser pitch is still making the rounds and I’m still getting questions about it, so I’m re-posting it here for your information.
The data below and my comments are all from a year ago, I have not updated or revised them (and the ad itself, though undated, still appears to be unchanged from a year ago as well). For what it’s worth, I did just go back and check on the performance of those investments over the past year — the five big Canadian banks are all up and all moving together, they’re up about 50% on average over the past year and, perhaps not surprisingly, have had almost exactly the same performance as the average big US financial institution (the XLF ETF, representing the financial sector, is also up 50% since February of last year). And Goldman Sachs, which is the bank they were (and are, apparently) predicting would go bankrupt is up even more, with a total return of just about 70%.
So, without further ado, the tale of woe and bankruptcy that we deciphered on February 8, 2016:
If you’d like an external indicator for the fear that many folks seem to have about the market, you need look no further than the world of newsletter teasers. There are almost always “doom is nigh” teaser pitches around, and they’ve been there since at least the 1980s, but they proliferate during times like right now, when things are looking uncertain or when the market is moving downward — that’s when we’re most likely to respond to “things are going to be terrible” sales pitches.
And, since we’re already in a somewhat pessimistic mood so far in 2016 for whatever reason — whether it be the presidential campaign’s cycle of exaggeration, or the drop in the S&P 500 over the past few months, or the failure of our “can’t miss” investments in gold or hot IPOs (or whatever) to save us — the copywriters can find fertile ground for weaving their magic. So far the ones that have caught our eye are David Stockman’s inaugural teaser pitch promising that Amazon will crash (that’s been a good call so far, with AMZN down 20% in the last two weeks), and today’s pitch from Michael Lombardi that “You’ll Never Guess Which BIG American Bank is Going Bankrupt NEXT.”
Lombardi’s ad, which is hawking subscriptions to the aptly named Judgement Day Profit Letter, is, in fact, similar to the ads he was running in January, 2012 about buying “New Swiss Bank Accounts” — which should probably come as no surprise, since 2011 and 2015 have been by far the worst years for the broad market since 2008 (and the financial sector, which is what he was talking about then, as now, was down by about 25% on the year as of December, 2011).
Here’s the “imagine yourself in a panic” spiel that opens the ad:
“70-times more leveraged than Lehman Brothers…
“You’ll Never Guess Which BIG American Bank is Going Bankrupt NEXT
And just like Lehman Brothers, the government won’t save themR