"The bull market's over" warns Chris Ailman, CIO of CalSTRS - the largest teachers retirement fund in the US, and the 11th largest public pension fund in the world - "and we're in a bear market..."
"This market's been highly concentrated in a handful of so-called 'stay at home' names... and we're far from out of the woods."
As CNBC's Carl Quintinilla admits, this concentration is exactly what Goldman warned about - that this always resolves the same way... badly for the broad market as the small number of names are simply unable to carry the weight for long.
As the Nasdaq Composite nears unchanged on the year, Ailman notes that historically, "the other boats don't rise up to [the handful of concentrated stocks] level, they usually decline down to the rest of the market... and currently those stocks are priced to perfection."
"We're going to be in bear market territory easily for a good nine months... with no return of the bull market anytime soon."
Ailman does not see a cataclysmic decline from here but believes a 2950 to 2350 range for the S&P 500 is more likely, as he explains the ugly reality of what "re-opening" will really look like and it's not a v-shaped bounce.
"We still have a long way to go [economically], especially if we have a resurgence [in the virus] in the fall."
"While the optimism in this market right now is great, we'll see some downward pressure on this market with all the uncertainty."
As investors seem to willingly ignore the health and economic truths, Ailman says:
"this market is divorced from reality," adding - with a frown at its outlier nature, "there's such a strong bid to this market - particularly in the overnight futures trading - it just doesn't make any sense."
The bottom line is Ailman agrees with Buffett:
"there's a big risk... it really seems surprising that there's such a strong bid into this market... when the reality is that this is still a very serious virus with cases/deaths plateauing, not declining.
This is a health recession, not a financial recession, and we're not seeing an improvement in the health data that we have to pay attention to in order to decide what's going to happen in the markets... and prices should reflect that."
Watch the full interview below:
Of course, when another CNBC anchor asked his so-called "investment panel" later in the show what they thought of Ailman's less than bullish comments, the response was as obvious as it was ignorant and groupthink-like: "Don't fight The Fed," to which they added the 'old chestnut' that "markets are discounting mechanisms and are seeing the economy back to normal within 12-18 months."