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« Using Gambling to Learn about Investing | Main | Sector Rotation and ETF's: The Need for a System »

October 03, 2007


Mike C

Who cares what Erin Burnett thinks or says? She's good looking and she's paid to sit there and look good. She's not paid for her superior insight into the market. She is a journalist, not an analyst, not a portfolio manager, not an investment strategist.

Maybe I do have something on my goggles or my sense perception is off but aside from Peter Schiff, I can't think of any other bearish analysts or strategists that appear regularly on CNBC. On the flip side, I'm pretty sure I could have a good night out on the town, if I could get a $1 from every CNBC guest who is bullish on stocks because they are "cheap" relative to bond yields. And no, I'm not interested in rehashing any debate on the Fed model.

As much as some people like to go after Ritholtz I think is outlook is alot more nuanced. I would argue to characterize him as a permabear indicates one's sense perception if off. He provides perspective/reasons to be both bullish and bearish on the market.

As far as what is the contrarian position, I'm not sure the blogosphere is all that relevant. I think metrics like the asset allocation models of top investment banks, and cash positions at mutual funds are alot more relevant, and based on those bullishness is the consensus position, not the contrary one.


Hilarious post. The tone captures the bull's view of the bears as well as it captures the bears view!

My thinking is that if the market moves higher or lower over time the bullish / bearish allocation adjusts a bit here and there, but by definition, the clearing price reflects the attitudes of the day.

The real split, beyond the TV filter, the blogosphere etc. should be about 50/50. If it's not, it will be.


Markets assume that the fed will ride to the rescue no matter what and as of now they are correct.

Bill aka NO DooDahs!

Anybody who looks at CNBC and sees nothing but cheerleaders has a #%$%^ screw loose, and shouldn't be driving, since their sense perception is soooooo poor. Listen, Erin "Maria 2.0 without the CEO" Burnett went from riding the bull to wearing a recession rat, when very few of us were talking about buying. That network is bipolar: things are VERY good or VERY bad, no in-between. Sensationalism sells, and that's what they sell. Sensationalism. If you see only bulls on CNBC, you need to take a look at cleaning the $#^ off of your goggles.

The web is full of bears. Any compilation of sites that includes traffic rankings (yes, I know traffic rankings are imperfect) will float the bears to the top of the list. Now, whether the internet consumer demand for bearish putridity, er, punditry, is indicative of the typical retail do-it-yourselfer is another matter, a question of fact that is probably beyond our power to answer. I believe the answer is "yes," however. Check the tone of popular posts at the aggregators, like Seeking Alfalfa, et al, and you'll see the same theme as you do at individual blogging sites.

The really funny thing is that, even though the web is full of bears, they still have the huevos to call themselves "contrarian." Look, if you're one of the 2 or 3 dozen writers at the top of Alexa who is calling for an end to the bull market and 10-15 years of sideways action and/or an economic collapse, I've got news for you: your contrarianism has no "edge."

If I had a dollar for every time over the past 2.5 years that someone has told me a particular comment or post of mine was a contrarian sign of overbullishness and an impending market top, well, I'd be able to get another case or two of Mountain Dew on my next Wal Mart run. Gimme a dollar for this comment, and I'll get some Trident to put in the Kia's ashtray.


As an advisor, I've been seeing much more bearishness than bullishness. When people are bullish, it's often because the market only seems to go up, thus they feel they can trade and invest for themselves. (I've seen many, many brokerage statements, and most people are just this side of hopeless. It's not really their fault. They're told by many that they can can should do it themselves. From what I've seen, the Dalbar study is very accurate in its conclusion that the average investor nets less than 4%.) I tend to see one of two attitudes. (1) "I've tried it myself, did lousy, don't follow the stocks I've picked or the markets, but I know I should invest, so I'd appreciate some help; or (2) "I invest in CDs."

I don't see any investor bullishness about oil, gold, or emerging markets. The only bullishness I see is on t.v., and even there it's pretty restrained, imo. They're looking for the good rather than saying things are great.

None of this is to say the bears don't have good reasons to be bearish. From my perspective, though, the bears appear more emotional right now (not all, of course). I have multiple investors in almost all cash now because they're so worried. I've read many posts on the net saying the same thing.

Personally, I see a mixed bag. There's good and bad. The one area I'm very curious about is the dollar. Boy oh boy are people bearish on the dollar. It's practically universal. This trade is about as one-sided as it gets. I'm not betting big on the dollar just yet, but I am definitely very curious to see how it all unfolds. I really don't see great strength in Europe's future, so I don't see any fundamental reason for continued stength in the Euro relative to the dollar. Just my two cents.


To RB and others noting that the same could be said for bulls --

Sure. Someone should do it. Have some fun.

I haven't heard anyone cite a problem in finding bullish analysts for TV, however.

Thanks for the comments:)



Hilarious, but true. Funny thing is you could do the same story on the Kudlowian bulls. Oil prices going up? It doesn't matter, inflation is under control because the core PCE says so. Oil prices going down, well, that's a great time to buy stocks because inflation is falling with falling energy prices. House prices going up? It's a strong economy and a great time to buy stocks. Inflation still uncomfortably high? Well, everybody and their mother knows that the government CPI calculation took into account that prices have been falling all over the country, inflation is well under control and it's a great time to buy stocks.

Bill aka NO DooDahs!

Did you compile this list solely using the "search" feature at Barry's blog?

Mike C

Found it. This was written 1/24/00 which is 2 months before the bubble in tech and Internet stocks peaked, and we began a multi-year outperformance cycle for value managers.

Pretty funny stuff.

As a side note, I've noticed a definite pickup in the blogosphere for ridiculing and attacking the bearish/cautious perspective. I can't help but wonder if from a contrarian perspective this is a sign of a potential top in the major market averages.

On the bullish side from a contrarian perspective, the WSJ apparently had an article the era of Walmart is over. Perhaps a buy signal for WMT?

Mike C

ROTFLMAO! Absolutely hilarious. With that said, it is easy to caricature or do a tongue-in-cheek piece for any position. You never know who might have the last laugh.

There is a classic Motley Fool post from the "new paradigm" tech era of the late 90s which is a caricature of the typical value manager letter to shareholder. I'll see if I can find it and link it here.

The irony of ironies was the author clearly intended the piece to be a caricature of (and ridicule) the typical value manager who was buying the forsaken "old economy" stocks at that time and refusing to buy overvalued tech and it wasn't too much longer the value managers were 100% correct.

The "bear leader" might be right about economists:

"One of the papers that didn't make it into the Behavioural Investing book (but with hindsight perhaps should have been added in) was on the performance of economists in forecasting recession. In it I pointed that economists are simply hopeless when it comes to forecasting recessions (I could have stopped that sentance before the word recessions).

Their track record is truly appalling. The chart below shows that in recent history (1980 onwards) the consensus of economists has not managed to forecast either of the recessions that have occurred. The data for this charts from the Philly Fed Survey of Professional Forecasters.

In the past I have proposed that simple quant models often have the edge of human judgement (see Chapter 22 of Behavioural Investing). Some new research by the San Francisco Fed shows that my supposition that economists would be no different than many other fields in finding their subjective forecasts outperform by a simple model was correct.

In a new paper Glen Rudebusch and John Williams show that a simple model based on the slope of the yield curve has significantly outperformed economists in forecasting recessions. They show that even if we use the economists own probability of recession estimate (rather than their spot forecast), the simple model wins hands down."


Great stuff. Its amazing how well a certain amount of caricature helps to highlight the essence and technique of the bear's position. I will know it when I see it from now on.

It would be interesting if you could take a look at the bulls rhetoric too. Can we have that next please?

I think that Murray Edelman whose book you recommend above would have enjoyed this post.


Freakin' classic! I can't think of a single "technique" that you didn't cover.

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