Market Bulls are Full of Bull
The list of idiots who believe that the economy is in recovery and that the bull market is, apparently, eternally long is, itself, eternally long. I became breathless critiquing their dumb comments and had to cut the list short:
Here’s a simple one to start with: Marketwatch’s Brett Arends says,
“Now is the time to buy stocks. Buy, buy, buy…. I’ve just thrown a whole bunch of my money at the stock market…. Sitting on my hands because I’m too worried makes no sense,” Arends says.
Well, sitting on your hands makes a lot more sense than going broke. Maybe if your head doesn’t work really well, sitting on your hands so they don’t get you trouble would be wise.
The problem with permabulls is that they have a nearly religious conviction that worry is wrong. Optimism is the creed for the good guys, and worry belongs to pessimists.
Well, that is only true when the optimists are right. I prefer to be a realist. I am optimistic about my life — brightly and cheerfully so — but I am completely realistic about what I see coming. My optimism does not tell me that good times will come if I continue to believe in them contrary to all evidence. My optimism tells me that, when bad times are coming, I will make it through, and I will be able to find good aspects of life even in dark times.
I guess I have a steely-eyed optimism. I feel great about life even when I see myself surrounded by dark clouds. I don’t have to paint the clouds in rosy tones or call them something they are not in order to keep feeling good. I love a good lightning storm. I am capable of seeing things exactly as dark or as light as they are and feel good either way. Maybe that’s the difference between faith and optimism.
Because of his foolhardy, blind optimism, Arends has just thrown a whole bunch of money down a rabbit hole: (That’s not the kind of thing I do to feel good.)
I fear that future returns may be at the low end. But that’s still better than a slap in the belly with a wet fish.
There may come a day very soon when he will wish he had taken a belly full of fish slaps over the cudgeling he’s getting from the stock market. But, hey, some people like self-inflicted pain.
I’m glad I’m not among the losers right now because I listened to me and pulled all of my money out of stocks before all of this hit:
Among the losers from the global stock plunge are star managers Leon Cooperman, Raymond Dalio and Daniel Loeb. Cooperman’s Omega Advisors suffered a 12 percent slide for August through Wednesday, according to The Wall Street Journal…. Loeb’s Third Point and William Ackman’s Pershing Square Capital Management also have endured significant losses, putting them in the red for 2015. (Newsmax)
No wonder, I feel optimism even when I see times as dark. Because I saw the darkness for what it was, I got out of the market and didn’t lose a cent during this plunge.
Never assume that because they’re big or famous, the talking TV heads and big-name economists have any ability to see ahead at all. If that were the case, there never would have been a Great Recession, for it was entirely the biggest of the big that caused it. They didn’t believe it was coming, even as they created it!
Another thing that causes bulls to rush headlong over the cliff like they were dimwitted little lemmings with every bear market that comes is the mantra “buy the dips.” If you want to be a bull because you love to be optimistic, and you think that optimism means never seeing the bad times as bad when they come, then you will look at every downturn as a going-out-of-business sale and snarf up what you think are bargains only to be caught in a market where a sinking tide lowers all boats.
CNBC’s Ron Insana is one of the big talking heads on television that pursues that line of thought, which I shall call Insana’s insanity:
While I am, and have been, concerned that China’s best days are behind it, I remain convinced the opposite is true for the U.S…. The bull market may have been interrupted with the first 10-percent correction in nearly 4 years, but the bull has room to run…. Go shopping on Wall Street…. Individual investors can pick up some stocks that are on sale, good blue-chip companies that are down 20 percent, or more.
So, eight months is a mere interruption?
Buy the dip is fine when the dip is a dip, but Insana is insane. This is a long slog through a swamp. What if I’m right, and this is the beginning of an implosion of the biggest economic bubble we’ve seen to date?
Ironically, Insana admits that the stock markets of this world need to be rigged if the game is going to keep going, but he doesn’t see that this is where he is missing the obvious. This is where he becomes truly insane:
“First, Chinese officials need to take appropriate and effective steps to shore up its economy and market,” he said, adding that Beijing is headed in the right direction.
“Second, the Federal Reserve may need to step in and convince domestic investors they will stand ready to support stocks by delaying an anticipated September rate hike.”
Really? Beijing has completely destroyed any real stock market by its interventions already. At the time Insana wrote this, the Beijing market had already become a completely rigged game where you could buy and sell only what Beijing told you you could buy and sell. Says Insana, we need a little more of that before it’s safe to get back in the market in China, but we also need more of that market rigging here. The US market needs to hear that the Fed will bail it out with endless supplies of additional free money directed at investment bankers. That’s the only way, we can be sure this is just a dip because we’ll know the bubble makers promise to keep inflating the bubble.
Wow! Apparently, it has become the new mission of the Federal Reserve to backstop the US stock market so that bulls can be confident they have a universal-size safety net.
Paint a little more rose dye on my glasses, please, so I can pretend the days ahead are good because I have Federal Reserve stock insurance to back up my investing wishes.
Don’t think, though, that this wild market that needs Fed shoring to be safe for investors is any threat to you income. So says another MarketWatch writer, Chuck Jaffe:
I asked George and Ilene how the market action — undeniably ugly but not panic-inducing — could hit home so quickly that they forced immediate changes.
Their answers were illuminating, largely because they showed a disconnect between gut instinct and portfolio, a zone where people let market gyrations affect them in ways that are unwarranted.
Moreover, George and Ilene are far from unique, as numbers from several big fund firms showed that investors weren’t just checking account balances when the market was moving, but making protective moves.
Apparently, the last thing you want to do when an enormous bubble in the stock market is crashing is protect yourself. In my opinion, George and Ilene saw the bigger picture but saw it a little late: they knew the economy was already in rocky shape and feared they had not gotten out quite in time. Jaffe is gaffing when he says they’re just panicked: “Attention, all passengers on the Titanic. You’re over-reacting. This is just a leak. There is no evidence yet that the ship will completely sink.”
Sometimes bad news is bad news, but Jaffe likes to see the lighter side:
What’s happening now isn’t coming close to worst-case prospects.
Well, it’s never close until it’s too close, is it? By the time you realize, “Oh, yeah, this actually is a worst-case prospect,” it’s too late. And that again, is why the permabulls always run headlong over the cliff.
What’s happening right now might not prove to be the “worst-case prospect,” but according to another MarketWatch article, it was already the worst jolt in a long time:
Dow posts biggest monthly loss since 2010. Nonetheless, Goldman Sachs is sticking to its year-end 2015 S&P target of 2,100, which reflects upside of 6% from here.
When Goldman Sachs made this prediction ten months ago, I wrote they were nuts. It was obvious to me that market had hit a hard ceiling and that the head winds building against all economies in the world would only increase to gale force and that nothing truly had been done to build a solid foundation for the economy. It was as much bubble-finance time as ever. Some people, however, cannot see or admit their bubblevision is wrong, even when the end is playing out.
David Kostin, its chief U.S. equity strategist, said in a note on Monday. “Continued positive macro data will be essential if our forecast is to be realized,”
Good luck with that.
CNBC seems to find more than its share of dimwits in the lineup of contenders for the dullest crown. In another headline, they write:
It’s a bull market, just doesn’t feel good.
Oh. It just doesn’t feel good. In this video, Kristina Hooper of Allianz Global Investors is challenged head-to-head by CNBC’s host about the recent fallout in the market place:
CNBC Host: Hey, I’m getting really hurt in my positions here for the year.
Kristina: For many investors, this could be an opportunity.
Host: But not for investors who followed your advice, you told people, “Cash is not the place to be; be fully invested.”
Kristina: And we’re saying we’re likely to have a very choppy market in August, but hang in there; we’re likely to see an improvement by the end of the year.
Even if I believed that, I’d get out now and re-enter at the end of the year. But I don’t even believe that. The host pursues his line of questioning:
CNBC host: I wonder if you regret telling people to be fully invested when the market continues to fall.
Kristina: Absolutely not. Because what investors need to do is not worry so much about short-term movements.
The glaring question that raises for me is “Why on earth would she thinks this is a short-term movement?” The bull market completely died more than half a year ago. The market has banged along the ceiling sideways for months, and now its falling as global pressures build and with no evidence that they will stop building. How truly dumb do you have to be to think a change to the trend trend that has already been ongoing for the entire year is “short-term?” I’d call that a “change in trend.”
A window into just HOW dumb you can be came up when CNBC’s host moved on to interview Dave Donabedian of Atlantic Trust:
Dave: We came into the year with the view that the bull market would continue but with a lower trajectory and more volatility, and that’s pretty much what we’ve seen here today.
He gets interrupted by the host who rebuffs him for this ridiculous comment:
Hang on, hang on, hang on, David! I’m sorry, David, but that simply isn’t true! If we have another day like this, we will have erased our gains for the S&P 500 [for the entire year], and we’re now in August. That’s not the continuation of a bull market surely.
No, surely it is not. Nor can eight months of sideways trading be called a bull market by anyone. Well, so you would think in a sane world, but apparently we live in InsanaWorld. People have been talking about this sideways market as if it is still a bull market for the entire year, and you cannot make them stop. A permabull is a permabull no matter what:
Dave: I think we want to get away from what’s happening on a given day in the market.
A GIVEN DAY IN THE MARKET! Oh, my gosh, the top of my head just blew off. Since when is a sideways trend that lasts months a “given day?” And, since this was spoken, there have been many more “given days” of sharp drops in the S&P 500. But we don’t want to pay any attention to that because it interferes with our calculus.
This is the kind of discussion that tells you the market bulls truly are driven by blind insanity in their determination to see everything as an uptrend:
Dave: When we look at trends for the S&P 500, we’ve obviously seen very substantial gains going back to 2009, and we expect that we will end up this year for the S&P 500 again…. Because the conditions for a bear market simply are not in place.
Wow! In other words, if the past eight months in the stock market doesn’t fit your trend line, just ignore it; go back further to find that long stretch when the line was upward, and say, “That is the line that continues forever. The last eight months was an anomaly.”
It is the same kind of blind faith that said in 2007 housing prices would always rise because they had been rising for many years in the past. That was spoken like a mantra, even when housing prices had been slipping away for half a year.
Well, up is up, until things go down. The upward trend ended this year:
That graph shows the last eight months of the S&P 500. I’m having a hard time spotting the “upward trend.” How many months of flatlining does it take before an “upward trend” stops being an upward trend?
I have a much longer list of blind-bull comments I was going to share, but this last one twisted my mind like a pretzel. That’s enough for one day. What clearer proof could you ask for that the vaunted talking heads see what they want to see and always keep a can of rose-colored tint handy, in case the coating on their glasses starts to wear thin?