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Contradiction II

Oct 26, 2011
In a weekend Wall Street Journal article entitled, When Funds Lend Stock, Who Gains? author Jason Zweig explains how a new study uncovered that many mutual fund managers skim proceeds from stock lending programs (mostly used in transactions for short sales.) In other words, mutual funds are lending stocks that investors own – but keep the majority of the proceeds for themselves. 
In fact, a researcher put it this way: “The people managing your money may sometimes be managing it more to benefit themselves than to benefit you,” said finance professor John Adams of the University of Texas at Arlington. 
In another WSJ article entitled, Numbers Game Offers Investors Little to Count On, (written by Jonathan Cheng) a senior investment officer and chief economist at OppenheimerFunds rationalizes current stock market volatility this way: “This is a market that’s not trading on fundamentals.” 
The US economy is in recession. Speculating that it’s not, as the media and stock markets are currently doing, has nothing to do with market fundamentals. Fundamentally, the Dow shouldn’t be trading above the midpoint. But there it is.
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