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Yet another reason not to buy penny stocks

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

The apparent bloody "re-accommodation" of a passenger on an overbooked United Airlines flight is horrifying enough on its own, but the real ugly surprise is that investors appreciated United's draconian efficiency measures and bid the stock higher,

"A 69-year-old man was violently dragged off a flight by police because United was unable to convince enough customers to relinquish their seats for crew members who wanted to go to Lousiville. Instead of offering more money and perks to volunteers, United used an algorithm to determine who would be evicted and then imposed its will by force … Traders responded to the brutality and miserliness of United by bidding up United's share price against the broader market index, and especially against direct competitor Delta Airlines. Pundits might think the episode was a public relations disaster — and obviously the cruelty towards this passenger was unconscionable — but investors seem impressed by the sadistic commitment to cost control."

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The trend would be less disquieting if it wasn't part of a broader trend that sees a widespread corporate indifference to both consumers and employees. The central bank-assisted financialization of the global economy is the major culprit here (monetary stimulus rarely reached Main Street as Citi's Matt King has pointed out numerous times) but I think demographics are also playing a role. Retirees don't care about business travel, they just need portfolio returns to fund their standard of living.

"Traders appreciate United Airlines's commitment to "cost efficiency targets"" – Klein, FT Alphaville
See Also: "@izakaminska My comment on Matt's United post… " - Twitter


Penny stocks and ethically sketchy behaviour go together like peanut butter and jam in many cases, and Financial Times writer Alexandra Scaggs details a newer wrinkle,

"It shouldn't really be surprising to hear that stock promoters are charged with secretly sponsoring more than 250 positive posts about small-cap stocks on sites like Seeking Alpha between 2011 and 2014, according to a raft of SEC filings … The promoters also secretly paid writers to contribute to other sites, according to the SEC, with varying levels of brand recognition and credibility:, and something called 'SmallCap Network', to name a few."

"Surprise! People weren't analysing biotech penny stocks just for kicks" – Scaggs, FT Alphaville


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Bloomberg notes that Tesla Inc. is now larger than General Motors in terms of market capitalization and I refuse to believe this will last very long. Yes, Tesla has far better growth prospects than GM, but as famed industry executive Bob Lutz recently said, "They lose money on every car, they have a constant cash drain, and yet everybody talks as if this is the most miraculous automobile company of all time … [Musk] has no technology that's not available to anybody else. It's lithium-ion cobalt batteries. Every carmaker on the planet has electric vehicles in the works."

Tesla sold just over 76, 000 cars in 2016. General Motors, which does make maoney on their cars if only from financing in some cases, sold about 10 million vehicles.

"Bob Lutz, the auto industry's 85-year-old bad boy, goes off on Elon Musk and President Trump" – Los Angeles Times
"Tesla Just Passed GM to Become America's Most Valuable Carmaker" – Bloomberg


Tweet of the Day: "@SuB8u: The warehouse robots are coming. Self-parking, self-driving and available on call 24x7 " – (link to amazing video of chinese packaging facility)

Diversion: (Article mentions a number of important findings – it's much less about identity politics than headline suggests) "'How dare you work on whites': Professors under fire for research on white mortality" – Washington Post

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