This Is a Sign - Greed Is Good
note: This is an opinion piece and not a recommendation to buy or sell Sears stock. Bob Brooks nor clients of Bob Brooks have any short or long financial interest in Sears within his management program.
Eddie Lampert, the CEO of Sears, loans the company 200 million dollars from his hedge fund. Investors go crazy and start buying up the stock. The stock goes up 9%. Then it is up another 3% this morning. Now this is the same company that Eddie Lampert admitted to a few months back that they might not make it. What CEO actually says something like that? This is the same company that faces the same problem as many other retailers. They don't have a business model that can compete with the monopoly they call Amazon.com. (Which begs the question. Will Amazon.com ever be accused of being a monopoly?) This is the same company that is getting sued by its' employees alleging that Eddie Lambert encouraged the employees to buy company stock. Of course those employees that followed that encouragement lost millions of dollars. Finally, this is the same company that needs a 200 million dollar lifeline to survive. Of course that is not how they are spinning it.
Help me understand what makes Sears a good investment? An investment in Sears is not an investment. It is a gamble that 200 million dollars is going to make them look short-term profitable when the long-term problems have not been solved.
Gordon Gecko in the 1987 movie Wall Street famously said, "Greed is Good." Greed and speculation are signs that we are in the final innings of a bull market that is out of balance and spinning out of control. Investors get bullet proof in the final stage of bull market cycle. To me, you would have to be bullet-proof to invest in Sears stock.