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October 15, 2019 | Shares of Boeing, Johnson & Johnson Flout Good Sense

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

A glance at the charts of Boeing and Johnson & Johnson shows what stock-market bears are up against as they patiently await a meaningful correction of excesses that have been building in the financial system for nearly a decade.  Are the portfolio managers who support these two stocks without a trace of nervousness crazy, or what? Boeing has received relentlessly negative press since December, and for good reason. Its huge fleet of 737 Max jets has been grounded for an overhaul of faulty navigation equipment that caused two crashes resulting in 346 deaths and a spate of lawsuits around the world. For its part, Johnson & Johnson just got socked with an $8 billion jury award that is not even related to the motherlode of lawsuits they will face because of talcum powder’s supposedly carcinogenic effects. The $8 billion verdict involved a guy who supposedly developed man-boobs after taking J&J’s antipsychotic drug Risperdal as a child. Boeing may be in slightly better shape, having made progress settling with the families of some of the passengers who died in the crashes. But other aggrieved families undoubtedly will seek jury trials that will leave the airline exposed to open-ended liabilities for the foreseeable future

Fund Managers’ Omerta

And yet, the charts show that the shares of both companies have held up astoundingly well considering that their legal problems could drag on for years or even decades. After shaking out the weak hands, DaBoyz put the stocks back on their respective glide paths as though nothing of consequence had happened. Indeed, the stocks look capable of remaining buoyant more or less indefinitely, or at least until the inevitable bear market lays waste to all stocks. In the meantime, the omerta that binds those who make their living throwing Other People’s Money at a small handful of must-own stocks will prevail. A stampede out of Boeing and Johnson & Johnson shares in particular is coming, but not until a bull market that long ago took leave of its senses draws its last breath

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October 15th, 2019

Posted In: Rick's Picks

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