Landon Whaley reminds traders not to take trading advice from people with a vested interest in you investing in the market.

This week’s “Headline Risk” focuses on the risk of the pervasive uber-bullishness of the Old Institution.

We’ve discussed the perma-U.S. equity bullishness of the Old Institution on a couple of occasions, and last week it was on full display, causing FOMO (fear of missing out) in even the most resilient of us.

For the record, I’m not perma-bullish or bearish, I’m perma-Fundamental Gravity driven. In Q4, we carried bearish biases on a plethora of U.S. equity sectors and very few bullish biases — all predicated on the prevailing Fundamental Gravity 4-in-Q4 environment. As we traversed the first three months of the year, and here in Q2, we have shifted to being mostly neutral on U.S. equities outside of three bearish and six bullish biases. Once again, these biases are being informed by the data and our Gravitational Framework.

In contrast to this data-driven approach to evaluating markets and determining where capital should be risked, the Old Institution continually pumps the idea that if the markets are open, you ought to be cannon-balling into U.S. equities with your hard-earned capital.

Last week, I saw headlines on Bloomberg inflaming the FOMO muscle inside all of us:

  • “Ever-Optimistic Stock Strategists Getting Left Behind by Rally”
  • “Hedge Funds Snubbing S&P Rally May Be Forced to Play Catch-Up”
  • “‘Melt-Up Bets’ Entice Wall Street as Hedge Funds Chase Gains”

Then Larry Fink, CEO of BlackRock, the world’s largest asset manager, showed up on CNBC’s SquakBox to say he’s bullish because “most investors are underinvested” and “we have a risk of a melt-up here, not a meltdown.”

The rationale behind this “melt-up” thesis is that despite markets rallying to start the year, ol’ Larry hasn’t seen money being put to work in equities. In a nutshell, he believes that when underinvested investors get invested, equity markets will surge higher. I’m not saying he’s right or wrong, but this guy’s compensation is directly tied to money getting invested, rather than sitting in cash on the sidelines. He’s always going to tell you that the water is warm, and you should come swimming.

You’ve got anchors like Tom Lee telling you to invest like it’s 2009 and we are coming out of a financial crisis. Don’t forget, Tommy Boy was CNBC’s Bitcoin guy telling you to buy Bitcoin all the way up to its December 2017 high of $19,783.06, and then telling you to buy the damn dip all the way down during 2018 as it crashed more than 80% to its December 2018 low of $3,917.

As an investor, you’re being bombarded with this type of bullish sentiment at every turn, and the FOMO is real. I’m not here to make a call on the S&P like Mr. Fink. And though I’m not bearish on the S&P, there are other areas of the U.S. equity market I’m far more bullish on. As for Tommy Boy’s assertion that the next expansion is underway, our Gravitational Framework is telling me to take the other side of that trade as growth is far more likely to slow during Q2 and Q3 than it is to begin accelerating again.

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