"Rock Star"
In September 2008, I wrote:
Keep it in mind when you read articles like this.
Just as the permabulls will never tell you to sell, bears can have a hard time saying "buy" -- particularly when their fame is linked inextricably to their bearishness. Obscure pundit issues dire warnings but is mostly ignored, often for years. Pundit becomes famous when his warnings come to pass. Viewers/readers/subscriptions/salary all skyrocket. Panic subsides and the market bottoms somewhere along the way. Pundit's popularity starts to level off. Market starts long, slow recovery. Pundit spends the next decade or two warning that we haven't seen the worst yet. |
Keep it in mind when you read articles like this.
posted by The Cunning Realist at Monday, May 04, 2009
11 Comments:
He might be obnoxious, but the case for bearishness has not gone away.
Massive deficit spending, "mark to market" accounting and entitlement/pension blow ups have not been fixed.
I think it's too early to call bs.
Nearly 9 months ago, when asked to predict a bottom value for the stock market, I picked 50.4% I watched the market fall just a little through that floor and recover. Comparing notes, my colleague predicts it will experience volatility in the current range until capital decides that equity is safe again and the broader markets show signs of expansion. Then we'll see the capital flows from sovereign and private funds come back into equities and the bear market will officially be over. YMMV.
That's 50.4% of DJIA peak - 7138
OK, there are signs that the current bailout might actually work.
But this is now the fourth or fifth bailout since the 1987 crash, and each has been bigger than the last, and each crash has had more repercussions. So if this one works, all it means is that the next crash is taking down the US Treasury.
There is really no safe place to put your money at the moment.
BFF's with Clinton, hey. Hmmm...
What's in it for them? This pretty much says it all. "The recession has been great for me,". His credibility rating just sank.
When we start elevating these guys and gals to "rock star" status, the gig is up.
Did you see the Roubini comments in this thread?
Agree on "the recession has been great for me." Still, the guy did nail it.
Yuck.
I must admit that I never so much read Roubini, as I did read TCR saying "Bears like Roubini are right this time around". I think our host is viewing the market through a better lens.
That being said, who does more harm to the people who listen to them?
* A half-dozen "perma-Bears" like Roubini, who will tell people the market hasn't bottomed yet while it slogs dismally through a "long, slow recovery for the next decade or two"... their devotees won't lose very much if they buy into the market many years from now, because nobody except Federal spokescreatures believe the market is going to shoot up rapidly;
... or is that worse than ...
* A hundred thousand "perma-Bulls" with media megaphones -- who aren't saying the market will shoot up anytime soon, but are still pushing the "buy and hold, in the 'long run' it always goes up" mantra. (JM Keynes reference intentional)
Of course, somebody posting after me is going to point out that the market won't recover until people get optimistic about it again... to which I can only remind everyone, the Market is not the same thing as the Economy, and the Economy is not the same thing as Life. While millions of Americans who listen to perma-Bulls are "buying and holding", they get hit with things like evictions and medical emergencies, moving expenses if they're lucky enough to find a job... and are forced to sell those stocks they're "holding" at a loss. And of course the perma-Bulls collect their fees at every turn.
I think we need a few Roubinis to correctly interpret the events of the past few years, not only that but also to remind people that investment should really be a game of the elite with disposable income to invest; I think the last few years have shown pretty clearly that tying critical life-savings and bare-bones retirements into the stock market is a big mistake. The non-elite would be better off saving, paying down debts, and investing in and maintaining their own businesses instead of wading into the shark-infested waters of high finance.
nice post. thanks.
I completely agree with whatever thing you have written.
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