Washington, DC -- (ReleaseWire) -- 07/28/2014 --What do Asset Bubbles and Pornography Have In Common? I Know It When I See It, says Dawn Bennett, CEO of Bennett Group Financial Services.

What do stock and bond market asset bubbles and pornography have in common? A Supreme Court Justice once said of pornography, “I know it when I see." That's what they have in common! she says in her latest warnings to investors:

That simple notion of “I know it when I see it” is showing up everywhere in the market place. The perfect example is this unknown public company CYNK Technology (pronounced cynic), ticker symbol CYNK. The stock ran up from 6 cents per share in June of 2014, to last week, July 14, 2014, as high as $21 per share in a month. At $21 per share, that's a $5 billion valuation for the company at its current peak, July 20, 2014. The thing is it only has one employee, a $1.5 million loss on the books from last year, a really unappealing website, and one major shareholder that owns 90 percent of the equity in the company. It's based in Belize, Central A merica, and it's registered in Nevada. The stock is up 36,000 percent since June of 2014. It is impossible to justify the reasons it shot up through the roof, but it did. Companies like CYNK Technology were a major cause of the last financial crisi, yet no one saw the problem coming; asset bubbles. So, what do asset bubbles and pornography have in common?

Fifty years ago last month, a United States Supreme Court decision regarding pornogra phy was handed down in 1964. The case was Jacobellis v. Ohio, and it was argued whether a French film with sexual content could be banned by the state of Ohio because of its obscenity laws. Now, according to Supreme Court justice Potter Stewart, the film was not hardcore pornography, and how he determined that was his now famous quote, "I know it when I see it." Justice Potter Stewart explained that although he could not define what hardcore pornography was, he said, "I know it when I see it." The same goes for smart people about today's asset bubbles, which are in almost every asset class, yet no one seems to want to acknowledge them. Even when the last bubble burst six years ago in October 2008, then Fed chairman, Ben Bernanke was asked why the Fed didn't see the problem coming, and his infamous quote was, "All bubbles appear obvious in retrospect."

Speaking on the topic of asset bubbles last week, July 14, 2014, current Fed Chair Janet Yellen said, “The committee recognizes that low interest rates may provide incentives for some investors to reach for yield and those actions could increase vulnerabilities in the financial system to adverse events. While, prices of real estate, equities and corporate bonds have risen appreciably, and valuation metrics have increased, they remain generally in line historical norms.” To which I say, actually they don't. It seems to me that the only people that don't see the bubbles are the ones creating them. It’s up to investors to pay attention before the current stock and bond asset bubble finally bursts and causes havoc.

Here are a couple of warning signs from this past week of July 14th, 2014 that investors should heed. J.P. Morgan's earnings slid 7.9 percent on weak trading volume and near record low mortgage production according to the company. Their gap revenue was down 3 percent to $24.45 billion, and it was even down further on non-gap basis. It wa s a negative 2.3 percent to $25.35 billion. The company reported their earnings per share as good news. What boosted the earnings? J.P. Morgan used a reserve release of $521 million to buy back common stock, which boosted earnings. So they raided the piggy bank to report a profit. This is a troubling trend in the banking sector, and it isn't just J.P. Morgan who's suffering from plunging trading volume and new record low mortgage production. It's across the board so far for all the banks that have been reported.

Citibank is another example. They reported they beat earnings per share at $1.05. Well it was this one-time, non-reoccurring charge of nearly $3.8 billion, a settlement that’s going to the U.S. Justice Department for fraudulent mortgage backed securities sales, which shows up as merely a pro forma adjustment of net income when, in reality, none of it was cash flow. According to the media, they beat their earnings per share. So, Citibank's stock rose 3 percent. They had a $3.8 billion settlement and may be $7 billion in total when done paying, and the stock shot up 3 percent. It's unbelievable. The other part is Citibank's revenues actually dropped 4 percent. When big banks like Citibank and J.P. Morgan are having reduced and lower revenues every quarter for the last two years and their earnings per share are only going up and having a positive response because they've adjusted something in their balance sheet, that isn't a good investment.

To finish off that week’s another "I know it when I see it" moment last week was when Carl Icahn, poster child for leverage buyouts, on CNBC, said, "I'm very nervous about the U.S. equity markets." It’s the older, smarter market pros that are actually telling us that this gig is up. Right now potential costs have crossed potential benefits in the marketplace, and there's no way to regain them again. So, when you hear people like Ica hn basically saying, "I know it when I see it," investors need to listen to avoid another stock market downturn.

All market data references are sourced to Bloomberg terminal database.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized progra ms are des igned with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill. For more information, call 866-286-2268 or visit www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program on called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included Rock Legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction. The show is a great complement to Dawn’s monthly investing seminars that take place at Tysons Corner in McLean, VA, where she discusses in vesting.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or dbennett@bennettgroupfinancial.com