This quote shows a modest degree of concern, but it is described as an opportunity to double down, and keep buying as stocks get lower.
To me, it still looks like more of that same No fear attitude:
"Between inflation and the liquidity crisis, this is one of the toughest markets I’ve seen. But it’s not a market you sell into. Any losses you take by being too early will be more than offset by buying cheaply.”
-David Dreman, DWS Dreman Small Cap Value Fund
To me, this still has that complacent ring about it.
>
Source:
Stock, Bond Slumps Signal Worse Than ’94 on Inflation
Michael Patterson
Bloomberg, June 30 2008
http://www.bloomberg.com/apps/news?pid=20601213&sid=aFtuRQCRl7qk&
I’ll sell you this buggy whip for $1.25. It has $2.00 worth of materials, and 6 hours of labor went into making it. It’s the steal of the century (20th).
No takers.
I’ll sell you this buggy whip for $1.25. It has $2.00 worth of materials, and 6 hours of labor went into making it. It’s the steal of the century (20th).
No takers.
I’ll sell you this buggy whip for $1.25. It has $2.00 worth of materials, and 6 hours of labor went into making it. It’s the steal of the century (20th).
No takers.
I’ll sell you this buggy whip for $1.25. It has $2.00 worth of materials, and 6 hours of labor went into making it. It’s the steal of the century (20th).
No takers.
Just like we saw when the growth bubble had popped in 2000 – the van Wagoners, the Amerindos of the world took their real losses when they dove back into tech after the initial decline.
Same thing is going on with the value managers at the end of their bubble. It looks like this guy specifically has a positive return for the year. But, how much have the Marty Whitmans, the Warburgs, etc., lost trying endlessly to call the bottom in financials?
When money managers stop thinking they’re going to miss Citi in 1990 and start thinking they’re going to miss RCA in 1929, I’ll go more positive on the market.
this guy has an awesome yacht.
During a bear market, the advice of most mutual fund managers is virtually worthless. Most of them cannot sell short or buy put options (or even hold much cash).
Asking a mutual fund manager if the market is going higher is like asking a real estate broker if “now” is a good time to buy a house.
i would think he is talking about the particular stocks his fund holds and that he isn’t making a blanket statement about all (or most) stocks right now. PMs that have a long book think they hold stocks that are worth more than they are trading at right now and don’t want to sell into a market that takes so many stocks down with it.
believe it or not, one week, one month, one year from now, there will be a fair amount of stocks that had good positive performance. dreman thinks he owns them and he’s getting them on sale right now.
we’ll see over the coming months if his picks can perform.
How about this headline from Minyanville for all y’all bottom-feeders and such. “We are staring at the teeth of the buzzsaw this morning, and God help anyone still short the stock market and hoarding doomsday supplies.” Now, don’t get me wrong, I concede the fact that there will probably be a mini-rally somewhere in here. But why the hate for the shorters? It’s obnoxious comments like this that compel inexperienced investors to buy hand over fist and lose a fortune if and when the ticker turns against them.
DL:
pretty funny stuff. spot on. long-only equity mutual fund PMs are very limited (by prospectus) as to what they can do in a down mkt. it ain’t much.
Complacent… and untrue. Buying cheaper will always make more in the long run than buying less cheaply.
You may ‘make up’ in the sense that the price eventually rises back above what you paid, but you will NEVER ‘catch up’ to somebody who paid less.
Matt LaPorta:
How does it feel to get traded to “The Mistake on the Lake”? ;-)
Lol, not sure what you mean by that Joe Klein. I’m just a simpleton. But I’ve been short for weeks.
dreman is a great contrarian indicator. Is he still long Fannie, Freddie, et. al.?
I think craig is right, he’s probably talking his book of stocks, not the market in general. My guess is that Dreman is way smarter and a much better trader than anyone posting on here so I wouldn’t look at this as him saying that the market will go higher in 12 months, just that his picks will.
I believe one of the qualities to being a good money manager is being presumptive.
Given his track record why should he be fearful? After all, he generated a +14% RoR in 2001 and last time I checked that was a pretty bad year for the market.
of course the “Value” guys always tout the relative cheapness of stocks…..the problem is that they compare them to what???
Cheap is relative……just because the market was bullied up to beyond 14k on cheap money and ineffective policy that should not be used as an example of fundamental valuation….but in the “value” world….ala Bill Miller…..it is and is used as an example of “good buys”….
Take a look at Janet Yellen’s speech about how the economy needs to “return to normal”..normal as in bloated property prices fueled by cheap monetary policies for starters???
“Good Bye” is more likely…..
Ciao
MS
Asking a mutual fund manager if the market is going higher is like asking a real estate broker if “now” is a good time to buy a house.
Or a sporting camp owner if the fish are biting.
(in grand lake stream, barry)
I would not characterize the Dreman statement as “complacent” but rather as striking a balance between responsibility and adventure, which is absolutely essential for long-term risk management.
I believe Dreman would place himself into the camp of “buying into weakness and selling into strength,” which I find to be quite prudent.
Dreman is not timing the market — he is navigating it…
“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.” ~ Jesse Livermore
Kent (The Financial Philosopher)
BR’s next Blog: Dow @11,000, we hardly knew you. LOL
I got rid of my financial shorts. I don’t care if it’s too early. I’ve learned the hard way not to get too greedy, especially when you’re looking at the kind of gains those positions have made recently.
Now I’m scratching my head trying to decide whether to try and play for a rebound by buying so calls or maybe a bit of UYG.
Or is that just getting greedy again?
of course the “Value” guys always tout the relative cheapness of stocks…..the problem is that they compare them to what???
As far as I can tell if stocks were fairly priced based on their historical relationship with economic output, the S&P 500 should be trading at something like 800. Cheap IMO would be something closer to 500.
My suspicion is that much of Wall Street’s marketing effort goes into hiding basic historically reliable (long-term) relationships between asset prices and the real economy.
Super-anon
I’m holding off a little longer on longs.
I don’t have CNBC here, but don’t see on Bloomberg the panic apparent last March. Hell, there’s even a host on Bloomberg right now trying to get people to say that Fannie’s and Freddie’s problems, as well as the other financials, are merely “accounting issues” that could be solved by sitting on the problem assets until they come back, whenever that is. It’s all the fault of the accounting rules.
I think there’s a little more to drop, but wouldn’t be surprised if Uncle Ben drops the rates next Monday if there are precipitate drops. He’s probably hoping that some made-up favorable earning forecasts stabilize the market this week.
the market was disconnected from reality in Oct 2002. Once the Bushies decided to “auction” excess tax receipts the table was set for the creation of this bubble. Add in the lowest rates in 40 years and you have the makings of a disaster……
Here is why “fair value” doesn’t stand a chance in hell..
July 7, 2008- The top story in Bloomberg this morning, analysts at Deutsche Bank, Lehman Brothers, and UBS predict the S&P 500 index will have the best performance since 1982 during this year’s second half. The consensus according to a Bloomberg survey calls for a rise of 18% by next January. On the high end, DB chief strategists believes the S&P 500 index will end the year at 1,650 and Lehman’s Ian Scott is predicting 1,630. The market fears earnings will collapse and interest rates will surge on inflation worries, and “neither is going to happen,” Scott said.
AS long as there are people like that (who make a buck from wholesale deception and outright lying) “fair value” doesn’t or will not mean a thing.
Ciao
MS
Looks like “fair value” made a sudden change at 3 PM.(again)
What a crock!!!!!
So, I’m checking precious metal prices on CNBC and I see where they are having a segment called “Breaking the Bear”. Funny, I don’t remember seeing any segments called
“Bashing the Bull” when the DOW was at 14K. Did I miss that?
What I would take more seriously would be something like
“Oh my god, this is scaring the bejesus out of me and if this goes south, I may be living under a bridge when I am old, but on balance, I think there is a real buying opportunity worth the risk”
The comment you posted makes me wonder in exactly what form, direct or indirect, the writer gets paid to get people like me to buy stocks.
Housing will drop more maybe 20% or 25%. Houses are still overvalued in this market.
The sky is falling….Jim Cramer today on his show advises we may be entering a recession and nothing may work except possibly biotech….wellllllll….duhh….
For a seer of the markets you are only about 6 months tardy Jim…but thanks for the heads up….
Bruce in Tennessee
Barry – why can’t you believe that not all tires go flat with a loud blowout? Some just slowly leak all their air out.
I think they could drop this pig all the way to dow 10000 and you will still not see the capitulation you are looking for – unless some cataclysmic event takes place. (i.e. Iran, failed investment bank, etc.)
On the other hand – G8,Bush, and Congress all trying desperately to prop things up for the election. Rebate stimulated earnings will be fine on the consumer side. On the financial side, everyone from those crooks at Goldman to LEH to MER are all cooking the books now to get the numbers to where they want them. UBS, and all the banks already have their lobbyists buying lap dances and rounds of golf for the policy makers as we speak!
I concur with Mr. D. I’m getting ready for a melt-up, too.
He doesn’t seem too concerned about how much lower stocks could rapidly fall over the next few days.
I keep going back and forth on this. Right now, it looks like strong hand sellers are toying with their prey. Wild trading for some moments both last Thursday and today appears foretelling.
Hard lower still to go notwithstanding, there’s way too much at stake and way too much capital laying around to let it all blow apart. 1929 did not start on such a solid note either.
What will be inflated? Maybe Dreman knows…
There isn’t that much fear in the market yet. I recall trading on March 17, closing my short positions. There was a palpable feeling of, “the Fed is going to do something, right?” I think there is a lot further to go down.
Dreman has a good record, so he should not be easily dismissed. That said, he has been on the wrong side of a lot of credit-sensitive financials.
Other people’s money.
Barry seems to want a huge down day before becoming bullish again, but what’s the difference from going from 13,000 to 11,000 gradually vs. a one-day 2,000 point crash?
~~~
BR: There are enormous technical and psychological differences — see how the long bloodbath of 1973 compared to the 1987’s relatively quick snapback.
There were many cyclical and economic differences between the two crashes — but how you get there is very important . . .
Support for my theory about a value bubble. The real money is lost when adherents of a particular philosophy jump back in too early:
http://seekingalpha.com/article/83121-guru-returns-show-just-how-tough-the-going-has-been-lately