Armstrong Economics Blog/Trading Re-Posted Dec 20, 2022 by Martin Armstrong
QUESTION: Marty, your Socrates predated Fink’s Aladdin by a decade. Blackrock’s stock dropped about 50% from 2007 into 2010 when Socrates got the whole crash right. It picked the very day of the high in 2007 and they were calling it on the floor Armstrong’s Revenge. Socrates called for a Directional Change here in 2022 and it was correct. Socrates is forecasting Aladdin. Cool!
Socrates has forecasted events years in advance. Nothing else does that. You warned at the WEC about the danger of a fund getting too big. My question is rather straightforward. Do you think that Fink’s influence can save Blackrock in the future?
ANSWER: Fink lost a ton of money before and left that firm. He is a good salesman, but I am a trader. I watched how the Hunt Brothers ended up in bankruptcy because their position in silver was too big and everyone knew it. If they tried to sell one ounce, the market assumed here it all comes and everyone and their 5th ex-wife jumped in front to sell. BlackRock is in a vulnerable position. It is TOO BIG and that may buy influence, but in a liquidity crisis, the danger becomes you are like the Hunts and everyone will front-run you.
The marketplace is so intricate and the regulators are corrupt, anything goes for there is no loyalty on the street – ask Lehman Brothers and Bear Sterns. I had the Aristotle Onasis estate precious metals positions I had to liquidate. He had the largest private holding of platinum in the world. It took me months to get approval from the CFTC just trade above exchange limits. When I got approval and called a dealer for a quote, everyone knew the position. Someone in the CFTC let their friends know.
Fink is on board with Schwab and preaches Stakeholder Capitalism. That philosophy was never Schwab’s but was born during the Great Depression before there were social programs from the government. It was a complete disaster and set the stage for the takeover boom of the 1980s.
I was advising many of the takeover players back then. I showed these charts and how the Dow bottomed in 1977 in terms of book value thanks to Stakeholder Capitalism. I showed clients we could buy companies, sell the assets, and double or triple the money. That became the genesis of the movie Wall Street with Michael Douglas.
It was Milton Friedman, back in 1970, who exposed how Stakeholder Capitalism was inefficient and stupid. It was a derivative of Marxism that took down Communism. He laid out that such a role was that of government, not corporations, whose #1 fiduciary obligation was to its shareholder. Under Schwab, I could say, “OK I will go public; everyone sends in money. I will give you shares in return and then say — OMG, there are people starving in Africa!” So, I decide to give 50% of all the profits to them and not my investors. This is Stakeholder Capitalism that Fink endorses thinking it is something Schwab has invented. Worse still, he has adopted that I believe to raise money from Schwab’s disciples. It Ain’t Capitalism – It’s Marxism!
The problem I see is that you simply cannot collect that much money to manage without becoming the elephant in the room. By the time we get to 2025, it does not look like any amount of influence will matter. Aladdin is not the same as Socrates. It cannot project out decades. Fink is specializing in high-frequency trading and ETFs. This will be very interesting in the next couple of years. He claims he is investing for the long-term so don’t judge him by the fluctuations. Those who said that in 1929, “HOLD”, lost 90%. It took 26 years for the Dow to return to the 1929 levels.