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House of Cards
-- February 8, 2002
Stocks may have succeeded in pulling off a last minute bounce today, but it's only a matter of time before this house of cards comes tumbling down.
Accounting scandals have rocked Wall Street. Enron is in the midst of Congressional hearings about its accounting methods. The SEC and the FBI are investigating Global Crossing on the heels of its bankruptcy filing. And Tyco, Williams Companies, Elan, and others have been the subject of close scrutiny by investors. And investors don't like what they see -- they've sold off stocks for five of the past six trading days.
As more negative news hits investors, stocks will fall. In addition to spurious accounting, Wall Street will face huge goodwill writeoffs when first quarter earnings season approaches, continued weakness in an economy that Wall Street had falsely promised would rebound quickly, and additional lawsuits on everything from asbestos to tobacco to tires to firearms and so on.
Plus, when the brightest spot in the markets is gold and mining stocks, you know that investors are scrambling for safety. Today's bear market bounce will soon go splat.
Stocks Higher After 5-Day Selloff