Within a week's span, another ugly expose of social and racial ignorance permeated national headlines, this time coming from the vaunted halls of the National Basketball Association, an organization that has prided itself in diversity and global outreach. That NBA commissioner Adam Silver's hands were forced, both internally and publicly, should be an assertion that is irrefutable. No business enterprise with ambitious international aspirations can survive the cancer of an unrepentant brute like Los Angeles Clippers' owner, Donald Sterling, officially standing as one of its preeminent representatives.

There are many irrefutables in this recent scandal, chief among them that Mr. Sterling's remarks concerning the African-American community is reprehensible. However, the mere existence of overwhelming evidence of an egregious character flaw should not serve as a precedent for the unprecedented. By roundly denouncing Mr. Sterling and by attempting to forcibly remove him from his legally owned asset, the NBA is embarking on a dangerous moral hazard by potentially allowing the eviction of property rights under grounds of evidence collected either illegally or unethically. This further raises the question of what is considered "reprehensible" behavior and provokes the ire of black protectionism at the expense of other protected minorities. Finally, the controversy underscores a hegemonic paradigm of "tolerated intolerance," or the subconscious propensity of many Americans to silently share or sympathize, to varying degrees, with the sentiments verbally expressed by Mr. Sterling. The universal denunciation heaped upon the embattled owner may in fact backfire, propping Sterling as a messiah for the propitiation of America's silent racial sinners, and thus redeeming large swathes of corrupt social infrastructure through the avoidance of a limelight now the exclusive domain of one blighted individual.

One of the biggest concerns regarding the NBA's proposed sanctions against Mr. Sterling is the forcible removal of an asset that he has legally acquired and owned for several decades. That the Clippers organization itself will lose sponsorship money, a relatively affluent fan base, and star players, contributors and employees is a given. The NBA has every right to prevent any individual from partaking in any function associated with the league and it has, to its credit, exercised those prerogatives in regards to Mr. Sterling. However, affecting the ownership of a franchise is an altogether different story : a deal is a deal, whether it involved a racist or not.

What's most troubling is that under normal circumstances, an owner of an asset cannot be forcibly removed from his ownership rights unless he has violated a law that nullifies those rights. Under the First Amendment, the right to property cannot be voided simply on the basis of ignorant speech. This is why Mr. Sterling was fined for housing discrimination in a prior federal case but was still allowed to keep the property in question.

The entire article can be found < here >

I made the call.

That's right : I rebalanced my portfolio yet again. But unlike many of the "sponsored" guests of CNBC, Bloomberg, Fox Business, etc., I am rebalancing for the purpose of balance itself. Recognizing the dramatic rise in large cap equities since the bottom-fishing days of 2009, a near three-fold return is more than enough for me. With any such acceleration in any financial sector, whether we are measuring public securities, national GDP, or employment data, there really is such a thing as "too much." Those that are holding out for just that extra drop of gas may end up getting derailed later, a fate that I have no intention of wishing on myself, and more importantly, to my family and clients.

Consider this excellent article by frequent CNBC contributor Michael Santoli, in which he juxtaposes current market conditions with the tape of 2005. In particular, he noted that large-cap equity indices absorbed hefty gains following a bounce from the bursting of the internet bubble, and 2005 was marked by indecisiveness. Further expounding matters was Google's astronomic rise of over 400% against its IPO, which occurred only a few short months ago in August of 2004. This led "The Economist" to headline an article entitled, "The Echo of a Boom?," which mirrors bearish sentiment currently expressed by alternative media sources and select offerings from the mainstream.

But the similarities don't end at mere conjecture : by Memorial Day weekend in 2005, overheated tech stocks fell by as much as 12% while the broad market remained relatively stable. So far this year, the tech-centered NASDAQ is the clear laggard amongst the major indices, with its fortunes changing abruptly in the first week of March. Tellingly, its chart pattern is dramatically different from the S&P or the Dow, displaying an aggressive broadening wedge, a rare formation with bearish implications.   

Another parallel is the action taken by the Federal Reserve. In 2005, the Fed was reigning in easy-money stimulus that it had administered following the market breakdown near the turn of the century. Then chairman Alan Greenspan signaled his intent to retire, leaving Ben Bernanke to carefully oversee the rate-lifting process. The connection with Bernanke's decision to exit front and center after negotiating the wake of the 2008 crisis is perhaps more than coincidental. 

While the comparisons are eerie, there's no guarantee that moving forward, the equities market will resemble what occurred since 2005, when the S&P and Dow Jones would both go on to hit record highs before utterly collapsing one year later. On the flipside, there's also no guarantee that the equities won't resemble  what happened after 2005.   

One of the key differences between then and now is that the S&P 500, while certainly flat for most of 2005, maintained a consistently upward trajectory. In fact, after the lull of the first quarter, the index accelerated in a respectable manner, closing December at an average point level of 1,248. Contrast that with this year's price action : the market veritably tanked at the opener, setting off superstitious concerns of the January Effect.

This discrepancy in market dynamics leads me to believe that large-cap equities are petering off, shedding momentum as professional traders desperately attempt to hold the fort. Perhaps they will be successful, and we may even see new records this year, such as clearing the 1,900 point threshold. Nevertheless, the underlying fundamentals are, in my opinion, bearish and for reasons stated earlier, I see little need for exposing myself to great risk for marginal gains.

Ultimately, we'll see how this plays out but there are times that call for careful prudence. This may be one of them.

In what can only be described as the understatement of the decade, a CNN Money article opens with the deadpanning headline, "Americans still don't trust the stock market."

Really? I thought Americans loved getting financially raped by the elitist cleptocracy, the multinational banking conglomerates, and even the mom and pop boiler rooms. Who would have thought that getting a 50% haircut in portfolio valuation, sinking the domestic and global economies and sending millions of families into a panic would create a decline in trust? Frankly, I'm shocked.

Okay, not really. Further, I'm not surprised that the trend is continuing on a "growth" curve in which the article goes on to state that it "was the third year in a row that individual investors expressed a negative view of the stock market." Unlike market corrections, where volatility is mostly psychologically limited to professional traders who have a keen interest on the daily goings-on of the equities sector, a market collapse  is an entirely different story : such extreme downfalls affect the economy at large, which necessarily means massive layoffs and all the accessory evils that accompany such bottom line tactics.

That the American people have a profound distrust from the markets stems from not just the issue of portfolio valuations but the entirety of the destruction. Prior to the 2008 market crash, the housing sector was upended by the subprime mortgage crisis and countless thousands of families lost their homes. Multiply that by the chaotic jobs market which has at least directly impacted 10% of the national population and indirectly affected many more.

Inevitably, crying over spilled milk is a fruitless endeavor, no matter how justifiable the outrage. At some point, we must move forward, using our hard-earned lessons as a guidepost to better and smart decisions. So what does the article posit as a solution? "While stocks are prone to boom and bust cycles, experts say a well balanced portfolio is the best way to grow wealth over a long period of time," writes financial journalist Ben Rooney.

The experts are wrong. The mythology of the well-balanced portfolio stems from the equally false assumption that "stocks have been in a bull market for more than five years." Such a statement requires a suspension of reality only redeemable from the extremely naive. But because it's a common practice in the consumer retail sector, such linguistics-judo may be more acceptable considering America's penchant for consumption.

When a particular product goes on sale with an advertised savings rate of 50%, the consumers' natural reaction is that of the savings, not the original price. If the savings price was $5, we assume rightly that the original price must have been $10. But if the original price was already $5, but for a few days prior to the sale was artificially lifted to $10, the sales ad would still technically be correct, even though nothing has changed from the consumers' perspective.

This legal but completely unethical practice is demonstrated on Wall Street right before your very eyes. In 2007, the benchmark S&P 500 index closed at a record 1,561.80 points. Following the '08 crash, the S&P bottomed at 683.38. From there and only there was our rise to new record levels (1,890 points) considered a bull market. But if we shift our time frame back just one year, we will see a far less impressive record.

If, as we are often told, the long-term trajectory of the markets yield approximately 8% annualized returns, the S&P 500 today should be at 2,200 points assuming that the cataclysmic events of 2008 did not occur. As it stands with all events accounted for, we are earning an average of approximately 5% annually on the large-caps. Perhaps not an eye-opening discrepancy but in percentage terms, we are underperforming base expectations by more than 37%.

To me, that is one giant time suck. It's a financial time vampire, the kind of which I warned against. My passive solution for vampires as well as underperforming equities is avoidance. There's no point investing in something that yields paltry returns if that investment doubles, triples, or quadruples your risk exposure.

Then there's my active solution. I have advocated that we are entering into an era of selectivity. Blind adherence to past protocols simply because they "worked in the past" will simply not cut it in the Millennial age. Many, perhaps most, will be in for a very rude awakening. I hope that this will not be you.     

Jordan Belfort was the one time king of penny stocks whose legendary ability to sell trash to a garbage collector was chronicled in the major motion picture Wolf of Wall Street. Like many of his ilk, the seduction of the boiler room enchanted Belfort, who utilized his innate talents to maximum effect. Pouncing upon the incredible margins offered brokers within the relatively unregulated over-the-counter markets, he quickly amassed an ungodly amount of wealth.

But as in almost every case of uncontrolled excess, greed got the better of Belfort. With the Feds tracking his every move, he was always on the run, covering corners while simultaneously cutting them. For a while, the notorious pump-and-dumper had the upper hand but hubris mixed with cocaine binges tends to distort a man's cognitive abilities, even that of the great Jordan Belfort. It wasn't long before his world came crashing down.

Penny stocks are the yin and yang of the investment world : it is either full-on or full-off. They can be an incredible asset catapulting you to unprecedented success or they could shatter your dreams in a nanosecond.   Their potency can make a man feel like a king one day and a lowly pauper the next. It's one of the most dangerous and altogether fascinating aspects in finance, a sector that simultaneously represents true market freedom and its stark antithesis. Understanding this concept is the first step in harnessing its incredible potential but one can never be too careful.

In that spirit, here are some signs to look for in order to avoid being the victim of a pump-and-dump!

1. If an online search for the company does not yield the company's website amongst the first few listings, let alone, the first page of the search engine, you might be pumped-and-dumped.
   
   
2. If the company's website looks like it was put together with a Geocities template, you might be pumped-and-dumped.
   
   
3. If the company's financials haven't been updated since 1998, you might be pumped-and-dumped.
   
   
4. If you have to inquire where the financials even are, you might be pumped-and-dumped.
   
   
5. If you placed an inquiry and you don't get an answer, you might be pumped and dumped.
   
   

Taking a little bit time away from the constant cacophony of the financial markets, I would like to discuss an important risk management strategy involving time vampires. These entities comprise of anyone or anything that diverts your attention from accomplishing your stated objective. More than just distractions, time vampires represent a hidden tax, an artificial liquidation of your intellectual assets in exchange for unnecessary aggravation.

As a business owner, attracting and maintaining a steady client base can be amongst the most daunting tasks, often failing those that cannot keep up with the rigors of an ever-evolving consumer landscape. That said, there is such a thing as client saturation. In any industry, turnover, or the constant motion of transactional business, is a critical ingredient of success. Even the Federal Reserve has a stated goal for turnover ; it's no secret that central bankers view a certain amount of inflation as desirable for economic growth. And if the bankers are clamoring over turnover, there's no reason why any business owner should ignore this metric. You have to run with your winners and cut your losers.

A loser in this context is easy to spot. They are the ones that have a million excuses for every proposal and must consult with an army of advisors before taking one step forward. While this seemingly gives off an air of prudence, what it really demonstrates is fear. Such individuals never really had an intention of committing to a proposed action plan but instead wanted to offer a pretense. In these circumstances, there's nothing you can do but let them go. Greatness has never rewarded the complacent, nor the craven.

In other cases, a time vampire is neither a client nor a subordinate, but an equal. This is a challenging situation but nothing that is unusually aggressive than in other potential incidents where time vampires lurk. When forced to work with one of these entities, it is best to play your game, not theirs. Your game is about achievement, to go with the money. Your opponent is about distractions, diversions and ultimate disenchantment with your mission.

Do not let the blood-suckers win! Control what you can control. Finish your task to the best and quickest of your ability. Attempt to make all communication with time vampires as efficient and professional as possible. A lurid but subtle mind game employed by the vampires is the use of key words or phrases designed to heighten your emotions. Don't fall for these juvenile tricks : focus on the task at hand and control your communication, keeping them short and to the point. The less words that you use, the less of an opportunity you open for misunderstandings. It also demonstrates a rising above of the fray, denying the vampire any chance of dragging you into their clutches.

Time vampires are all around us and with the moral decay of America, they will only increase in number. Fortunately, there are some easy tactics that we can utilize to deflect their attempts at subversion.  

In my second ever blog entry for JYE Financial (Now Firing : The New American Way), I discussed two failing companies, one of which was J.C. Penney. I mercilessly attacked the "bottom line" thinking of its management team as such tactics are woefully misaligned with the inherent nature of a business the size of JCP and is therefore subject to a potential boomerang effect where the long-term consequences of cost-cutting quickly overwhelm its short-term benefits.

Then in late February, JCP shares shot up 25% in a single day, the best performance on record since 1967. Did that deter my bearish sentiment towards the retail giant? Not even for a second! On that day, I entered a blog entry entitled, "Reversal of Fortune?" in which I argued that the technical mechanisms that permitted such an explosive move, namely an overly levered short float, belied a coherent marketing strategy that threatened its revenue base. In other words, financing a company through equity dilution did nothing to address the fact that for the most part, JCP does not have a dependable market share by which it can extract top line sales.

Almost as an afterthought, I mentioned the debt overhang that the lack of revenue will impose upon the retailer. Without a consistent stream of consumer dollars that are equally met with a passionate marketing message, JCP ran the risk of withering against a double-fronted war. On one hand, the mediocre improvements in revenue were not enough to offset basic business costs and other expenses. Yet the back door of legacy liabilities, the enormous long-term debt, grew larger and larger as evidenced by the descending cash flow statements.

Each and every time JCP fails to achieve a substantive target by whatever margin, a base level of investment dollars will quickly vacate the sector in search of more profitable (and stable) opportunities. Beyond conjecture, investors are only human : they want to make money and they prefer to do so in an expedient fashion. When either valuation risk or time risk comes into play, the likelihood of volatility increases. With JCP, they suffer from both and there's very little reason to commit capital in such a tenuous environment.

The same can be said for U.S. equities. I understand that the mainstream media will trumpet "improving economic data" and a "buying on the dips" mentality, but the elemental truth is that much of the investment money that was profited in the domestic stock market has already been rendered : there's not much room, if at all, for the regular folks.

That's more of a technical/psychological reason why I'm not a big fan of the large-cap equities at this moment. The fundamental reason is found in the JCP dilemma : where do we go from here? The stock market is where the engine of America's economic activity goes to dilute themselves in exchange for liquidity. With the S&P 500 regularly crossing above 1,850 points, it's safe to say that whatever liquidity was sought was most certainly found. Now unless the country has an actual plan to substantively restore the economy and not just regurgitate fairy tales, volatility will only become an inevitability.

Those that have not heeded earlier warning signs in the domestic equities market are urged to do so now : there simply is far too much risk to needlessly expose one's portfolio to the whims of hope and irrational enthusiasm. From the very beginning of launching my company, I have urged my clients, associates and pretty much anyone that would listen to be vigilantly cautious about the run-up in stocks. In fact, on March 5, 2014, I unambiguously stated that the conditions within the equities were uniquely dangerous in a blog entry entitled, "Why I Am Dropping Out."

The article ( http://www.jyefinancial.com/1/archives/03-2014/2.html ) cited the existence of quantifiable factors that contradicted the mainstream media's rationale for bullish sentiment, but the ultimate basis by which I personally exited the markets was discomfort. I no longer could justify laughable returns against risk leverage that grew overwhelmingly large. Further research into the behavior and velocity of market breakdowns gave me increased confidence that I was doing the right thing.

As it turns out, my timing could not have been better. On March 5, the benchmark S&P 500 closed just shy of 1,874 points. From there, the index wiggled about fairly meaninglessly between a high of 1,890 and a low of 1,840, with an average point score of roughly 1,860. For a full month, I gave my clients and my readership ample opportunity to review my analysis and to assess their own risk exposure. Many took my ideas and protected themselves, but quite a few were stuck in the tranches of normalcy bias.

Fortunately, the situation right now is not nearly as bad as it could be in the future. This means that you still have time to review your current financial circumstances and make appropriate decisions. One of the worst emotions that you can succumb to irrational hope, that the markets will magically turn around and give you another opportunity to sell at the very top.

Don't let a few percentage points force you into exposing yourself to even greater losses. Just think back to the weeks prior to the Crash of '08 : having known what you know now, would you squabble over a few points just to lose 20 or 30% valuation in a matter of days?  What many fail to realize is that a 20% loss requires a 25% gain to break-even. A 30% loss requires a 42.85% gain to cover. Such large gaps are unlikely to materialize in the near future if we were to have a severe market correction.

As of now, and I mean right this very minute, the priority of every investor is to :

            1. Get off your butt

            2. Assess your portfolio's allocation

            3. Adjust accordingly

The longer you put off this important task will only lead to further risk and unnecessary agitation. I can't stress enough how much of a favor you are providing the Wall Street albatross if you neglect to perform the above three steps.

Of course, if you like holding bags...  

With a snap of the finger, we are back at square one. The Monday Blues could not have gotten off to a worse start, with the Dow Jones shedding nearly 167 points following another triple-digit loss on the previous Friday. An even greater threat is the complete evaporation of the NASDAQ composite index, which in the last three trading sessions has lost nearly 200 points, a percentage drop of 4.6%.

Just what is a white-collar brutha supposed to do?

Presently, only one of the major large-cap equity indices is in the green and barely at that : the benchmark S&P 500 is holding onto a 0.7% percent gain against January's opener, and this is at severe risk of going under. The Dow Jones is upside down at -1.2% year-to-date, while the NASDAQ is the obvious laggard at -1.5%.

Some might question the intense granularity of the above trends. Markets never move in a consistent pattern and as long-term investors, we should ignore the day to day irregularities and focus on the big picture. The problem with such entrenched and perhaps well-meaning advice is that it's wrong : every investor should have a measured and disciplined accountability towards their money. Take for example your children : they are a long-term investment from both a financial and familial perspective, yet does the length of the relationship determine your level of concern for them? Or let's say you bought a car with a five-year warranty. Does that embolden you to not take any care at all for the vehicle? The rational answer is no on both counts, so why should your finances be any different?

I approach the domestic markets from a day to day outlook. With trillions of dollars of wealth being leveraged in the most important stock exchange in the world, I see no good reason why you shouldn't know what your money is doing. There is no such thing as an insignificant moment in finance ; often, the calm before the storm provides signals of where the macro-trajectory will head. Ignoring such signals is akin to deliberately disregarding symptoms of a potentially serious health problem.

But when the markets are pulling back aggressively as we have seen over the past few days, there's a reason for that. Perhaps its speculation on geo-political events about to go awry, or an expected price shock in key commodities due to a weather-related supply shortage. Any number of events could trigger investor fear, and fear is the deadliest emotion in finance.

As psychological studies have shown, the threat of losing is far more poignant than the anticipation of winning. It is perhaps the single greatest reason why stocks tend to move with far greater velocity on the downside than they do on the upside. And when the professional money looks up at the score, they will soon realize that they have done nothing, absolutely nothing, over the past three months.

The danger, then, is that the big boys will cut their losses and move over to something that has positive momentum working in its favor. The effect of that leveraged pessimism could reverberate not only in our borders but across the entire globe. I think that it's no small sign that gold and silver, despite having a rough time of it, continues to inch forward.

Where else would you turn?