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« What You See Depends upon where You Sit | Main | System and Discipline »

August 07, 2007



Don - I do not really understand your question, wondering "right about what?" He has been right for over five years on most of the key economic metrics and moves. All forecasts should come with a time frame!

I think he is correct on the measurement of savings, and it is pretty obvious that most who disagree do not bother to look at the data he cites.

We'll see about some of the other points, and I promise to write more.

Meanwhile, what do you think? We'll soon learn whether Fed policy has an effect on the economy, with a lag. I realize that many have already decided -- those who do not need data!




Do you still think Malpass was right?



Warehouse funding is now non-existent for 100% LTV mortgages TO low FICO pilgrims with no documented income. What a surprise. There is also virtually no market for MBS or CDO's, and the margin calls to the Hedgies which own these vehicles have forced them to sell their equities en mass. Unwinding their longs have driven the prices of good companies down, and unwinding their shorts have caused the price of crappy companies to rise.

RESULT - A short term opportunity for long term investors to pick up quality equities and mutual funds at bargain prices.


#6 Bears are focused on yesterday because its easier than being focused on the future. If you notice, they spend an inordinate amount of time analyzing, agonizing over and discrediting both the reported data and/or the sources of that data. Real investment guys look forward and don't drive their portfolios looking in the rear view mirror.

That's maybe the most absurd thing I've ever heard. "Bears" drive with the rearview mirror, but bulls look ahead? You mean like how the majority of bulls didn't see any of the housing/mortgage stuff coming despite the fact that it was completely obvious and totally inevitable? (To name a one recent example of many.) My bet is that you were oblivious, despite the obvious endgame of that whole mess.

Bulls, just by virtue of being bulls, look ahead. That's just classic. Good luck hanging on to those "capital gains," dude.


Why even bother with Scared Beary?

Modus operandi of Beary--he either tries to discredit the information or discredit the source of the information that doesn't support his position. He is an intellectually dishonest investment pigmy with very thin skin. In fact, Beary's not an investment guy at all, he's a marketing guy. A snake-oil salesman, and liar.

Scared Beary is the very same flim/flam artist that projected DJIA 6800 for 2006 in the annual Business Week survey in December of 2005; its still on the web. Bring that up and this incompetent moron gags on his own bloated tongue.

He also polices his web site 24/7 (an odd way to spend time), referring to those who disagree with him as "trolls and assholes," as per his very own post of a few days ago. Not exactly a mature or thoughtful guy; certainly not anyone who can be trusted managing money.


He doesn’t keep score by the accuracy of his predictions. He is constantly out trolling for like-minded lunatics who see the world in the very same way that he sees the world. It’s easier to find those folks and then convert them into fee-paying clients than it is to find the truth or accuracy.

It’s the oldest game in town. These guys keep score on the basis of how much money they have under management or subscriber count and the fees that this generates...being right or wrong is only a SIDE-SHOW at best.

Funny how BEARY goes nuts when an economic number occasionally mirrors his bearish views... for that instant, they are always legit ... but when the number goes the other way, as they usually do, they are manipulated and part of a huge conspiracy.


The permabear mentality:

#1 Bears don't have to compete with the larger number of "bulls" who tend to be right, by varying degrees, some "95% of the time." The market is up, on average, 8-10% a year leaving the permabears shoveling shit in Petaluma 95% of the time.

#2 Forget the facts, fear sells even bigger.

#3 Bears don't keep score based on performance results (that would put them out of business in a heartbeat), he keeps score by the amount of fees he can generate.

#4, There are always enough fools and investment pigmys out there to make it worth his while to peddle his brand of snake oil. Likeminded financial morons travel well together.

#5 Bears aren’t investment guys, they’re marketing guys (snakeoil peddler) with a flim/flam niche.

#6 Bears are focused on yesterday because its easier than being focused on the future. If you notice, they spend an inordinate amount of time analyzing, agonizing over and discrediting both the reported data and/or the sources of that data. Real investment guys look forward and don't drive their portfolios looking in the rear view mirror.

#7 Most good money managers tend to be optimistic (because of #1), PermaBears are always pessimistic.


I really appreciate the comments from everyone on this topic. The disparity between the public and reality is a good topic that I will take up further.

I still feel like I missed the target somehow with this one. The key point is that the public has been depressed about the economy throughout the Bush administration. In 2004, the campaign hauled out a number of negative economic arguments -- something we would have done as Democratic strategists. But we are not doing politics here. Instead we are trying to figure out what works.

When everyone is too negative, it is supposed to give us an opportunity. When you see simplistic analysis you should think, "I wish I could play poker against that person."

So with Iraq, the key for the investor is how it affects interest rates and earnings. For the citizen, the answer might be quite different.



I think you could be right about Iraq. There's probably some "contagion" of sentiment about Iraq and our current government that has spread into feelings about the economy.

Bill aka NO DooDahs!

What most laypersons don't realize, and what Barry as a money-runner SHOULD realize, is that:
1. the Cayman Island location was chosen for a REASON
2. BOTH parties get some good out of it, especially investors in profitable times
3. "accredited investors" should know their risks
It's just the way business is done for many hedge funds, probably for most money managed by hedge funds.

The real audacity and gall is shown by the man who predicted four of the last zero down calendar years for the U.S. stock market, who now takes advantage of a short-term period of fear in order to claim that he was "right on method" the whole time. It also takes a lot of audacity and gall to make posts containing quotes like Buffett's "You try to be greedy when others are fearful, and fearful when others are greedy" and Lynch's "The key to making money in stocks is not to get scared out of them." while he's also making posts actively trying to scare the average investor out of the market.

Funny stuff.


Dr. Jeff, you write well. You write good, too.

Just to focus on a side and not the meat of it all, I am amazed that 2/3rds of folks in that poll believe that this is or will be a recession.

I wonder how much the Iraq War is tempering folks' moods. Especially considering the polling numbers for the President and Congress.


Bill -
Thanks for your comment, which captures the situation nicely.

I guess most folks are interested in the story about the Bear hedge funds and willing to assume that Malpass wrote something on command. My observations are more about the substance of the Malpass article -- something that seems to have gotten lost in the story.

He is a regular contributor to the WSJ op-ed section and his article is completely consistent with what I regularly read from him as a Bear customer. I have no idea whether the timing was manipulated or a complete coincidence.

My interest is informing readers about the housing market and panic. Malpass has been right for a long time and investors might want to pay some attention.

As usual, your comment captures the key issue for most observers, something that I apparently did not grasp when trying to discuss the substance of the article.


Bill aka NO DooDahs!

I would think the investors in the BSC funds were very happy with the Cayman Islands location while the fund was making money ... taxes have something to do with that?


As always, we are happy to have you stop by the site to clarify where I have gone wrong.

I admit that I got off on the wrong track, thinking that you were discussing substance, when I read the passage I quoted in my post -- "child-like","poor arguments", etc.

I can see that I was wrong because your comments got a big play in the financial media -- Dow Jones, Reuters, etc...

It sure is a good thing that I am not shooting for the audience big time, since I do a very poor job of it!

If you get around to it, would you please revisit the WSJ poll, something that you have cited numerous times. I believe your conclusion to be inaccurate, but as usual, I am willing to be corrected.



Barry Ritholtz

You completely misunderstood the point of that post: The entire WSJ Op-Ed struck me as utterly disingenuous.

For Bear Stearns to come out and claim "the Credit Crunch will be fine" -- on the EXACT SAME DAY they chose the Cayman Islands as the venue for the bankruptcy liquidation of their 2 hedge funds to "limit creditors' and investors' ability to get their money back" -- well, that simply struck me as unbelievably sleazy.

That was why the post was titled "The "Chutzpah" of Bear Stearns" . . .

Its about their audacity and gall -- not the substance of Malpass' column


I read Barry's blog because it's pretty entertaining, but I've really soured on his analysis over time. He strikes me as someone who has made up his mind and then hunts down data to support his viewpoint, rather than following the data to see where it goes. The WSJ poll is a perfect example.


Ritholz used to be quite good, but has suffered from a weird form of Stockholm syndrome, he has been captured by his own readers and has become the sort of blinkered bearish commentator he used to denigrate. The "You the man" type commentary from his readers simply reinforces this behaviour. He has sadly goe from a "must read" to a "why read?" Glad to say that a dash has filled the gap...

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