An Optimistic Pessimist


Barron’s published an Interview with Seth Glickenhaus — a 90 year old curmidgeon who’s a veteran on Wall Street, whose firm — Glickenhaus & Co. — manages $1 billion or so.

Here’s an excerpt of some of his more interesting comments:

“Glickenhaus says that “if Kerry is elected, the doctrinaire Republicans will sell stocks for a day or two, but then the market will go up considerably.”

Barron’s: Is this market keeping you young or making you older?
Glickenhaus: We like the market best when the pluses far outweigh the negatives, and we don’t have overhanging fears of negatives that can bite us. We also like the market when there are so many negatives and very few pluses that we stay away from it in a mincing way — that is, we go short. Today, the market is a shade on the high side, but only slightly in terms of the price-earnings ratio. The pluses and minuses balance each other, so it is difficult to be very pessimistic or very optimistic. This is always a time when we are uneasy.

Q: Would you like to enumerate the pluses and minuses?
A: The political picture has never been as negative as it is today.

Q: Does that matter to the market?
A: It matters tremendously. If Kerry is elected, the doctrinaire Republicans will sell stocks for a day or two, but then the market will go up considerably.

Q: Because?
A: Because Bush has been worse than zero as a president. He is bush-league. No. 1, he got us into a war and spent billions of dollars, dollars unfortunately which don’t have any positive offset in better housing, schools and infrastructure. And people are being killed. It is a war without any purpose other than to get rid of Saddam Hussein.

Secondly, he spent all his time campaigning for his next election, rather than overseeing the various departments of government. The military has many internal problems, which are surfacing in Iraq and Afghanistan. He hasn’t consolidated and integrated the CIA and the FBI and his new department of Homeland Security, all the military intelligence, which he desperately needs to do.
He has alienated foreign countries. He has failed to address environmental concerns. And in his approach to the Israel-Palestine War, he has been unaware that Israeli Prime Minister Ariel Sharon’s policy of non-negotiation is destined to fail, resulting in increasing mutual hatred and many more deaths and no solution. Fiscally, Bush has been totally irresponsible.

Q: And Kerry?
A: Kerry is a mediocrity. He is a typical senator who votes for the moment. He isn’t a statesman.

Q: If Bush gets re-elected, what happens?
A: If Bush gets re-elected, he will see it as a total affirmation of all his policies, and the deficits will grow. Perhaps we will have another war in addition to the two that exist, however preposterous this seems.

Q: Won’t whoever is elected have to tackle the deficits?
A: The only time they will tackle the deficits is if they can’t sell the bonds. And when that day comes, I don’t want to be long anything except very short paper. It isn’t a probability because foreigners don’t have better places to put their money. But they own a great percentage of our debt and are buying a big percentage of new issues. We are at their mercy.

Q: What about the notion that deficits are a necessary part of stimulating the economy?
A: We have never had anyone incur such a huge deficit, without producing any offsetting goods and services. This administration is unaware that the Third World War has begun. Never again in our lifetimes will we have wars like World War I and II, because every other country recognizes the U.S. has such a superior Navy, Air Force and Army it would take any nation 15 years to catch up with what we have.
But World War III has begun. It is a war that is fragmented in many different countries, fought by people working independently, and distinguished by poverty in every case, and often by fundamentalist religious fanatics fighting the establishment. We allude to them generally as terrorists, but in some cases the governments themselves are the terrorists and the rebels are fighting for a good cause. This war exists not only in Iraq and Afghanistan, but in Haiti, Colombia, Peru, the Congo and many of the African countries, Sri Lanka, India, Pakistan, the north and south of Ireland, Egypt, Saudi Arabia. This is ongoing. You may say we are here to talk about economics and the stock market, not the world at large. But the point is all these things affect the markets.

Q: People point out that during the Vietnam War, the market had its normal cycles.
A: True, but overall it was a negative. I’m not saying you can’t have a bull market, I’m just saying that psychologically and often business-wise, many of these things are a negative. Another negative has been the Federal Reserve, which has kept interest rates much too low for too long and overstimulated the housing market and auto sales, among other things, and borrowed dreadfully from the future.

Q: But people seem to think that’s about to change. What is your take on rates?
A: It is about to change to a minor degree at first, and then we will see. In a way, it isn’t really changing. If the federal-funds rate goes to 1.25% in June, it is still pretty low. But the direction is changing, and that has had an impact.

A greater impact, though, will be when we hit 2005 and 2006 and the normal demand of those years won’t be there, and that’s because we accelerated it in 2003 and 2004.


Q: On to the positives.
A: Big corporations have rationalized their operations, gotten rid of marginal employees and plants and brought in wonderful new technology and improved their products. Labor has become more cooperative to keep their jobs. The U.S. has become somewhat more competitive, except where very low wages have given other countries a great advantage.
Another positive is — and this is a mixed blessing — that the public has decided to invest more money in American companies. That has sustained the stock market. The monthly inflow into mutual funds has helped the stock market a great deal. It is a trend that also created the absurd 1998-99 boom and even the follow-up in 2003 and this year.

Q: What else should we be happy about?
A: Wages have gone up. National income keeps going up.

Q: I thought we were seeing a slowdown in wages.
A: But they still are going up. People are able to sustain enormous consumer credit. You don’t have great defaults. Home prices go to new highs all the time. Even though we aren’t employing enough people to take up the six million who enter the work force each year, we still have more people working at higher wages than ever before.

Q: So you don’t get alarmed when people talk about unemployment?
A: I’m alarmed by the three million who can’t get jobs and the people at the low end of the income scale who won’t be able to keep up with impending inflation.

Q: Good to see you, Seth.

Fascinating stuff from a colorful Wall Street character . . .

Looking Both Ways
An optimistic pessimist discusses bad government, good stocks and strong China
Barron’s, June 7, 2004,,SB108639081396029410,00.html

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  1. chad rich commented on Jun 10

    I read this interview over the weekend and really wasn’t surprised by his remarks.
    I’m a right winger, so I take issue with Bush as worse than zero. I guess Mr. Glickenhaus would have preferred the government keep the money from dividends he received this year. Yes, I know, thats hardly a case for re-election. However, I also notice that Mr. Glickenhaus paid no attention to the testimony offered up by former defense secretary William Cohen (from his own testimony before the 911 commission) “Concurrently, the U.S. intelligence community obtained physical evidence from outside the al-Shifa facility in Sudan that supported long-standing concerns regarding its potential role in Sudanese chemical weapon efforts that could be exploited by al Qaeda.

    The al-Shifa facility had been under surveillance for some time because of a variety of intelligence reports, including HUMINT reports identifying it as a WMD-related facility, indirect links between the facility and Bin Laden and the Iraqi chemical weapons program, and extraordinary security – including surface-to-air missiles – used to protect it during its construction.” Yes, I know Seth, indirect. So, I guess that doesnt count. Nor would the meeting in Praque between Atta, and Saddam’s son. Anywho, lets get back to the communication problem between agencies. Who should we ask? Why not Jamie Gorelick. Here’s a snip from the washington times ” As the No. 2 person in the Clinton Justice Department, Ms. Gorelick rejected advice from the U.S. attorney for the Southern District of New York, who warned against placing more limits on communications between law-enforcement officials and prosecutors pursuing counterterrorism cases,”

    One thing you are right on Seth is the market will rally no matter who wins this election.

    I’ll just close with this deeply partisan remark ” Lets win one for the Gipper!”

  2. Barry Ritholtz commented on Jun 10

    Yo Chad,

    I’m a pragmatist — so I agree with the characterization of Bush as a zero and Kerry as a mediocrity.

    The market doesn’t tolerate partisan theories or silly belief systems — you are either right or wrong, and dogma is irrelevant. As to the rest of your points:

    1) No, its not “all about the dividends.” Life is more complex than that (but you knew that). To call that “hardly a case for re-election” is the understatement of the year. If you want to understand why, read Stock Market vs the Economy.

    2) SecDef Rumsfeld already admitted there was no connection between Saddam or 9/11 or Saddam and Al-Qaeda. If you are hanging your hat on Sudanese WMD, you are delusional. And, I was pro-invasion, as you can read here.

    Suffice it to say, I am not pleased with the execution of the war. Poor planning, civilian micromanaging, bad strategies. Simply inexcusable.

    3) The CIA says the “meeting in Praque between Atta and Saddam’s son” never took place — Atta was under surveillence in Miami at the time.

    Finally, my only requirement for posting is that it be honest. If you are going to troll and post canards long recognized as false, you will lose the privilege.

    Please — get a damned clue . . .

  3. Pete Harrigan commented on Jun 10


    You may be losing it. You quote an old windbag who makes assinine and unsupported statements about Bush, then get all bent out of shape by Chad’s comments. Your overblown response makes you look far less reasonable than I always assumed you were.

  4. Barry Ritholtz commented on Jun 10

    Hey Pete,

    I quote a guys who’s been on Wall Street longer than you and I have prolly been alive –combined — his longevity gives weight to his views, IMO. He gave his perpsective — none too flattering, about either Kerry or Bush.

    As to Chad’s post: Many bloggers simply delete a comment they disagree with; That’s not my policy. However, I get more than annoyed when someone trots out long disproven falsehoods; Its propaganda — hey, lets stop pussyfooting around — its Bullshit and I have no tolerance for that.

    I work on Wall Street — I deal with enough liars every day, and I have no obligation to do so here. Chad was being disingenous at best, a god-damned liar at worst. So I blasted his nonsense; Its cheaper than therapy.

    BTW, Pete — there was nothing in your response I have any problem with — we may have a disagreement — but its an honest disagreement. You see something one way, I see it another way. Thats life. Its what makes the world go around.

    This is my home, and anyone is welcome to come here — on my dime — to read, to post, to whatever. But once they lay a pile of steaming Jack Grubman type crap in my house, then they should expect to feel my wrath. (And I was gentle on Chad)

    Not on my doorstep . . .

  5. American Dynamics commented on Jun 10

    If You are Geeky Enough to Wonder What Else is Going on While the Press Screams “Reagan, Reagan, Reagan”…

    Check out this acidic take on the presidency and politics from a wall street insider. Or perhaps you’ll want to think about why President Bush hired a private criminal attorney. Actually while the consensus seems to be that Bush hired…

  6. Matt Stoller commented on Jun 11

    Ah, Grubman. Brings back memories of a time when dishonest frauds were just trying to take your money.

  7. Synapse Chronicles commented on Jun 11


    An Optimistic Pessimist: “Barron’s published an Interview with Seth Glickenhaus — a 90 year old curmidgeon who’s a veteran on Wall Street, whose firm — Glickenhaus & Co. — manages $1 billion or so.” [via American Dynamics] Another uber-capitalist wh…

  8. Synapse Chronicles commented on Jun 11


    An Optimistic Pessimist: “Barron’s published an Interview with Seth Glickenhaus — a 90 year old curmidgeon who’s a veteran on Wall Street, whose firm — Glickenhaus & Co. — manages $1 billion or so.” [via American Dynamics] Another uber-capitalist wh…

  9. Bingo commented on Jan 22

    Yes, not “poly”, but certainly, Seth Glickenhaus has been on Wall Street a long long long time. But what’s more, he has most winning record you’ll find. He’s had 40 to 50 winning seasons (it was 40 when I pitched his UITs as a broker in the 90s.) He is the Joe DiMaggio of Portfolio Management, but he’s played for about 30 extra years beyond Joe.

    This guys judgement is proven, documented, tried and true– nothing less than extraordinary.

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