“Dude, you really love a good bloodbath, don’t you? You actually have fum when the market is getting killed.“
Prior to the collapse, there were few bigger bears than I. Kevin (my partner) constantly harangued me about it. That’s his quote above, and I admit to some level of guilt.
Understand why this was: The long hours of research put into identifying the variant perspective was a lonely path. There were no guarantees it would be correct. Worse still, it took a long time — years — to pay off professionally. I ate a lot of crow, and was mercilessly tortured by eejits over what I knew was a giant debacle in the making.
When the deluge came, I incorporated the collapse into my thinking. It changed the valuation calculus, the surprise factor, the psychology. I didn’t want to be one of those guys – the über bears who stayed negative regardless. This unfortunate crew missed the 1982 lows, the 1980s bull market, the tech boom, the 2003 post-dotcom-implosion rally, the commodity boom, the 2009 snapback.
After the flood, I started looking for the silver lining. We already had a massive crisis and collapse, so the worst of what came before was already reflected in equity prices and trader psychology.
Even after all this, these reflexive Bears refuse to flip. They will not admit the economy is getting better, albeit slowly. They insist the recession was a depression; they insist it never ended. These are the bears who cannot be killed. They will stay bearish, regardless of the data that all but insists otherwise.
These are the Zombie Bears . . . they cannot be killed.
As I write this, the market is off 1.5%, and some of our long positions will soon hit our sell discipline (We will stop ourselves out). This is the nature of asset management: One needs to be flexible, intellectually nimble, open minded. One cannot marry a position, ignore data that goers against it, and just hope for the best.
Markets on occasion appear irrational. They operate on different time scales than humans do. We are stuck in the moment, they exist across longer arcs of time. So very often, we cannot adapt to their ways. We fight them . . . and we lose.
Meanwhile GDP was revised to 2.5% (more than previously calculated) on increased exports boosted domestic spending.
Bad news, bears The Recession is over . . .
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Via Barron’s Econoday
First we had Zombie banks, now we have Zombie Bears.
Yes, in our mark to make believe world, where debt is monetized, unemployment is conservatively +10% but you can live rent free and die before paying off your maxed out dozen or so credit cards, I guess the recession really is over.
True BR, the recession (albeit not the real problems that were just papered over and made bigger) is most definitely over where I live, but I wonder if you didn’t just ring the bell here with this post?
PdP puts together some nice snaps, here.. http://www.ritholtz.com/blog/2010/11/commodity-prices-%e2%80%93-on-a-knife%e2%80%99s-edge/
Yup, looking in rearview mirror, economy was not in a depression, we’re technically not in a recession, and according to some we are in a deflationary environment even though my Turkey is 30% more expensive this week.
Time to go long was when the market/economy was turning back up. After this move, still time to be long? Climbing the wall of worry to dow 36,000.
I was once told that I was an optimist who thinks he is a pessimist. So maybe I have some deep belief that things will get better, and a surface pessimism.
With that background, there is “over” and there is “over.”
I am also reading this as a recovery. I think we are past the second dip, or “soft spot” as Barry preferred to call it. Just the same, I think you need a pretty academic outlook to call this “over.”
In many senses it won’t be over until we are firing on 8 cylinders(*), and we aren’t there yet. How many cylinders do you count, Barry?
* – I’m thinking I must be old to reach for that metaphor
I agree with Karen. Ok, we put the recession into a coma by smothering it with paper. The banks are all bankrupt. Housing is a disaster. Europe is screwed. Real unemployment is still near 20%. Deficits at record highs. And, of course, interest rates are at record lows.
So, yeah, the recession is over. Like the Korean War was over…whoops.
Sorry to repeat, but you guys see this one? It cracked me up and reminded me of so many idiot brokers I dealt with in my career.
http://www.xtranormal.com/watch/7644373/
Sorry, I have no idea how to imbed a clickable thingy.
Best quarter ever for corporate profits? Definitely a recovery (and robust one) for some. I view this is a very bifurcated recovery and economy where those at the top are doing very, very well, and likely even better than before, while most (aside from the FIRE and tech sectors, maybe) rank and file workers continue to struggle. The unemployment situation is just an afterthought at this point. Apparently our economy no longer needs them to thrive.
http://www.nytimes.com/2010/11/24/business/economy/24econ.html?hp
This one will be fun to revisit in six months when QE stimulus has completely faded, corporate earnings have cyclically peaked, a Spain implosion has brought down the euro zone, and housing has double dipped.
In fact, methinks this post might deserve treatment as a new “blog-style” version of the magazine cover indicator.
Of course, nobody knows for certain what the future holds. But all of the above stuff is not in the realm of unreasonable expectation. I wouldn’t bet the ranch against any of the above factors… nor would I bet against the odds that what we have just worked through, re, final blast of equity market strength and corporate outperformance in 2010, will in rear view mirror hindsight have amounted to one long post-stimulus “sugar high” (to borrow an El Erian term).
Given the current status of markets — overbought, overbullish and overextended, to use some Hussman terminology — it seems disingenuous to throw out the label “permabears” in such a manner as to lump in merely opportunistic bears who 1) have plenty of ability to make money long as well as short, and who 2) are currently paying attention to things like fundamentals, technicals, and sentiment, none of which are exactly flashing happy shiny signals right now.
And as for the recession being guaranteed over, that’s a mighty big call from a top down perspective, unless you want to argue that the next “gray swan” to hit — Europe, China, housing, return of the bond vigilantes, mortgages redux, and so on — will count as a new recession rather than an extension of the old one.
Again, will be fun to see how this post looks in 180 days. Making a note on my gmail calendar…
p.s. ‘scuse me, zombie bears (not perma)
What the hell is ‘fum’?
BR if I have to point out a person who “interprets” the data to fit his thinking that will have to be you. Now if the recession is over and recovery is here why is: 1) The FED went into QE2? 2) Home sales still in the crapper? 3) Unemployment at %10 4) Ex-inventories we had a 1.2% GDP 5) California still broke 6) Interest rates still at ZIRP
Now you make your living in the stock market and from your perspective “your” worst is over but for the bast majority is not. And yes regular people will go out a shop in droves this season but will the keep on shopping after the season is over?
The thing is, valuations never really got that low. If you look at P/Es using the 10-year averaged earnings, even at the bottom in spring of 2009, we only barely broke the 100-year average P/E. Clearly the market has regained it’s historically very high valuation, but it was never obvious that valuations had reached doom-and-despair lows.
[...] Seriously people, the recession is over. (Big Picture) [...]
The buy now, pay never, economy is back on its feet! I keep telling people that weee’re baaack. Over half the time, I get ‘negative feedback’. But yes, all that’s left are the after shocks.
BR writes:
Meanwhile, GDP was revised to 2.5% (more than previously calculated) on increasing exports boosted domestic spending.
Hey! That’s not that far out of line for what some of us previously calculated for 2010Q3′s GDP. Twice even!
That said, if that higher value holds, 2010Q4 will still be a tad slower, around 2.0%….
Of course, technically speaking, the recession did indeed end, and we’ve been in recovery for nearly 17 months now. But for the key statistics, the ones that form the “base” of our economy, the present has changed very little. We still have nagging unemployment, we still have unsustainably low interest rates, and we still have cost of living pressures via commodity prices. These are things that cannot be present for a prolonged strengthening of our economy.
I realize the terms “bull” and “bear” refer mainly to the stock markets. In THAT world, it’s business as usual. P/E multiples, yields, dividends, et al, are all shaping up nicely for the investor.
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