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5 Things To Ponder: "Bear-ly" Extant
Submitted by Lance Roberts of STA Wealth Management,
"It is a bad sign for the market when all the bears give up. If no-one is left to be converted, it usually means no-one is left to buy.” - Pater Tenebrarum
That quote got me thinking about the dearth of bearish views that are currently prevalent in the market. The chart below shows the monthly level of bearish outlooks according to the Investors Intelligence survey.
The extraordinarily low level of "bearish" outlooks combined with extreme levels of complacency within the financial markets has historically been a "poor cocktail" for future investment success.
As Michael Sincere recently stated rather sarcastically:
"If you study history, you know that no one thought the price of tulips, houses, or stocks would ever go down. Even most bulls believe that 'one day' there will be a correction, but that day is far away. After all, the Fed has an unlimited supply of magical tools, and they are determined to keep the market from falling.
Unfortunately for soul-searching bears, the Fed trumps all. As long as new money flows into stocks, interest rates are low, and the market keeps going up, why worry?"
That is the focus of this weekend's list of "Things To Ponder."
1) The Death Of Bears by Pater Tenebrarum via Acting Man Blog
“What prompts this missive is news that yet another prominent bear has apparently given up. The thing is, this bear – Wells Fargo analyst Gina Martin Adams – wasn’t even a bear, but merely a somewhat reluctant bull, whose targets got taken out a few times. It is interesting from a psychological perspective that a not overly foaming-at-the-mouth bull is considered a “bear” by the financial media, a “famous bear” even. She has now recanted, and has apparently been preceded by several others. An SPX target of 1850 points apparently made her the “most bearish strategist” on Wall Street!
‘Gina Martin Adams of Wells Fargo has long been known as the most bearish strategist on Wall Street. After all, at 1,850, she had the lowest year-end S&P target among major strategists. But on Tuesday, she got rid of that year-end target and initiated at 12-month target of 2,100, reflecting a mildly bullish outlook.’
Given that no prominent bearish Wall Street strategists seem to be left now – not even those forecasting 5% dips or flat markets – we won’t be able to report on any additional conversions."
2) The Two Pillars Of Full-Cycle Investing by John Hussman via Hussman Funds
"As value investor Howard Marks observed last week:
'Today I feel it’s important to pay more attention to loss prevention than to the pursuit of gain. Although I have no idea what could make the day of reckoning come sooner rather than later, I don’t think it’s too early to take today’s carefree market conditions into consideration. What I do know is that those conditions are creating a degree of risk for which there is no commensurate risk premium.'
So while many observers pronounce victory at halftime, in the middle of a market cycle, at record highs and more extreme market valuations than at any point except the 2000 peak, remember the two pillars. First, the combination of high confidence, lopsided bullishness, overvaluation, and overbought multi-year advances has predictably been resolved by steep market losses, time and time again across history. Second, strong market return/risk profiles warranting constructive or leveraged investment positions emerge in every market cycle, generally following a material retreat in valuations, coupled with an early improvement in market action. We believe that one of these is descriptive of present market conditions, and the other is well worth our patience.
“History teaches clear lessons about how this episode will end – namely with a decline that wipes out years and years of prior market returns. The fact that few investors – in aggregate – will get out is simply a matter of arithmetic and equilibrium. The best that investors can hope for is that someone else will be found to hold the bag, but that requires success at what I’ll call the Exit Rule for Bubbles: you only get out if you panic before everyone else does. Look at it as a game of musical chairs with a progressively contracting number of greater fools.”
3) Eerie Parallels To 1937 by Dr. Robert Shiller via Project Syndicate
“The current world situation is not nearly so dire, but there are parallels, particularly to 1937. Now, as then, people have been disappointed for a long time, and many are despairing. They are becoming more fearful for their long-term economic future. And such fears can have severe consequences.”
Read Also: For 90% Of Americans There Has Been No Recovery
4) The Tailwind To Stocks Is Gone by GaveKal Capital Blog
“Generally as equity prices rise, commercial hedgers take on a greater short position, and when price fall they take on a greater long position. When the position of commercial traders is significantly short, it suggests a large short position has been built up. If commercial traders are short and get their directional bets wrong, it provides fuel for the market to propel higher as commercial traders have to cover their shorts by buying stock. In turn, if commercial traders have closed out their short positions, this suggests there may be little fuel left for the upside in stocks.”
“This short covering induced buying has helped the equity markets attain all-time highs. But, now the short covering has largely been completed and will no longer provide much of a tailwind for stocks.”
5) Tracking The Decline Of Risk Aversion by Scott Grannis via Calafia Beach Pundit
“For most of the past five years I've argued that one of the dominant features of this recovery was risk aversion. The Great Recession so scared and shocked the world that risk aversion became exceptionally high. I've also argued that the main purpose of the Fed's QE program was to supply a very risk averse world with safe securities, by essentially converting ("transmogrifying") notes and bonds into T-bill equivalents (aka bank reserves). The point of QE was not to stimulate the economy, as many have argued, but to accommodate the world's intense demand for safe assets.”
Bonus Read: Profits Without Prosperity by William Lazonick via Harvard Business Review
Have a great weekend.
Little-known fact: When the stock exchange closes, the guy who comes out on the balcony with that big hammer slams it on the head of the person who lost the most money that day…” – George Carlin
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Nobel Committee Regrets Obama Peace Prize Award
http://www.scribd.com/doc/239498391/Nobel-Committee-Regrets-Obama-Peace-...
Those sleazy back-pedaling Norwegian fucks. I love this part: "The absence of qualifications prior to or since the awarding of the 2009 Nobel Peace Prize was by no means unique to this case. The prize has frequently been awarded to advocates for war or to individuals whose work has not touched on the field of war and peace."
Barack Obama was awarded the Nobel Peace Price for not being George W. Bush. It was a slap in the face to the U.S. I'm not GWB and I didn't start a war either. Where is my Nobel Peace Prize?
He was awarded the prize because he is the first "black" president of the United States.
Which he is not, in any case.
He is a mulatto.
So many things wrong on so many levels.....
Joe Frazier. Now that was a black dude.
Just ask "Muhammad Ali." Kept calling him "a gorilla" over and over again. Needless to say Joe Frazier was a might ticked off when it came to fight night...
Are you referring to the Swedish Nobel committee ?
They regret his subsequent actions, not granting him the award, and most of the letter is CYA.
Don't get me wrong - Interesting.
I'm going to make SO much money shorting this market.
Do it right now; the top is in. You heard it first here.
well, it's still a fake, you know?
I regret it too; I also regret the one the dumb fucks gave to Kissinger, the bomber of Cambodia back to the stone age dude, and Arafat, the indictable and convictable murderer. They really ought to just get out of the prize giving business altogether; a 6 yr. old could do better.
I repainted my decks and ended up in a corner and didn't how to get out... I finally jumped off the backside into the thicket and survived but got beat up pretty bad...
Sucks to be you. Ouch!
Many things coming down the road. Interesting times.
Harvard business review? Their advice has been marginal at best.
Either way, Im happy to see that most people don't believe there has been a recovery.
"Profits Without Prosperity" = Profits for Corporations, no Prosperity for People.
Surely has to be a recipe for success, eh?
Foreward Cronyism!
FED software applications do not require users to interact with them.
Nope... No bubbles here. > Forward Soviet
Bulls and bears do not mingle. Each has their own pudding they're peddling. Sentiment is why "bullishness remains bullish" and why bears need not even exist for equities to rocket higher.
The flip side is also true...just look at Japan or what appears to be going on in present day Germany. "Uber bears on the move...
Can't be a bear against a conspiracy with a printer willing to print trillions. The STUPID people that allow this are destroying themselves! No where in recorded history has the fraud that has been perpetrated been successful...except for a handful of people that spirit their money to switzerland shortly after. But they are many times executed in due course! I would be willing to help jamie with his throat cancer.
it usually means no-one is left to buy
Don't worry, the Fed will supply enough freshly minted Dollars to buy everything up - if necessary!
Yet everyday on ZH we are warned that a major hedge fund manager or money guy has gone full bear. I even think there was an article with at least 10 kingpins saying that they were bearish on the market and these were not your normal bearish all the time guys.
So if you can't scare them by saying all the smart guys are bearish then you scare them by saying no one is left to be bearish.
Which one is it?
Both; and there's no contradiction. "Bears" in the mass refers to people like you; civilians who don't know what they're doing. The special cases mentioned are professionals and do know what they're doing. The article is correct. There is no indicator more powerful, dependable and profitable than thsi one. The premise is easy to understand; it is the on-going conversion of "wait and see" skeptics that provide the new buyers, and only new buyers cause price increases. only new buyers, don't skip over that. when they are no more skeptics; the top is in. then the late comers get nervous because they're no new highs and they start selling; to who? and this is why markets go down faster than they go up. You can walk down a stairway or fall down a stairway, but you can only walk up a stairway, this is why the possibility of crashes always exists at overbought tops.
I don't agree that Bears have "given up", they've just faced the fact that all markets are manipulated to accomplish the goals of the world's oligarchs; and it's getting worse. Until an unforeseeable extant event occurs to move the market beyond the control of its manipulators, this will continue. Your knowledge of the market no longer has any validity when everything is manipulated and no one can "time" the crash. Might be end of next week or 20 years from now.
It doesn't matter whether you agree or not. We have data on this. It doesn't matter whether you agree that the sun came up today either.
like utada hikaru sang: "time will tell"
meanwhile BTFATH
**** OFF TOPIC ****
I know this is off topic, but I felt you all need to be aware of this:
The CBC is warning Canadians about a U.S. program where America law enforcement officers — from federal agents to state troopers right down to sheriffs in one-street backwaters — are operating a vast, co-ordinated scheme to grab as much of the public's cash as they can through seizure laws.
http://beta.slashdot.org/story/207105
Protect yourselves and respond accordingly...
One day the Luciferian Talmudian Banksters shall discover that the Laws of Moses are not Extinct but Extant. As are the Laws and Traditions of the Vikings.
The days of false-Christianity ("turning the other cheek") with which Emperor Constantin's crony Church Bishops have saddled our "Christianity-for-Peasants", are coming to a close. Fast.