Where are the Bears?

I noticed yesterday that the WSJ’s MarketBeat picked up quotes from both Raymond James’ Jeff Saut and myself, with each of us wondering where all the Bears went:

Such sanguine forecasts have the bears on Wall Street sharpening their claws. "Verily everybody is currently bullish on e-v-e-r-y-t-h-i-n-g, save me," writes Jeffrey Saut, chief investment strategist at Raymond James. Wall Street is experiencing a period of "upside hysteria given the various upside breakouts by the various indices as repeatedly trumpeted by the media." Barry Ritholtz of Ritholtz Capital Partners writes that the "noise out of the talking heads has been anything but bearish." He opines that "momentum is driving the market, with fundamentals taking a back seat …."

I guess the Journal is implying that we are 2 of the few commentators left making Bearish observations.

But the very best quote about the ursine absence comes to us from Richard Russell (via Jeff Saut’s comments):

“I’ve seldom seen a time when almost everything and everybody
appeared bullish. Bullish on the stock market, bullish on emerging
markets, bullish on commodities, bullish on the dollar, bullish on
housing, bullish on the economy. But there’s a problem. You see, the
great buys, the great profits, are made when we’re loading up on stocks
in the face of universal bearishness. When were stocks and houses a
great buy? The answer is during 1942 and 1949 and 1958 and 1974 and
1980. Those were major stock market lows, and stocks bought during
those times ended up providing their buyers big profits. Conversely,
stocks bought in 1966, or 1971, or 2000, when stocks were popular,
ended up giving their buyers headaches and losses.

Today, bullishness is in the air, people are spending with abandonment,
mergers and acquisitions are a daily event, volatility is low and no
one is buying puts, price/earnings are high and dividend yield is low,
and mutual fund cash is at record lows. Stocks bought in this kind of
atmosphere generally do not end up providing investor with profits.”

Richard Russell – Dow Theory Letters

Russell is an old pro who has seen every market bottom and top over the past 50 years — and according to Saut, called most of them correctly. (Saut’s address is temporary — if I can scare up a PDF, I’ll post it)


Note:  the comments the WSJ quote is based on will show up here later this morning . . .

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  1. SINGER commented on Mar 21

    MC Ritholtz,

    Good Morning, as usual the blog is killer….

    Whadya think about the Bernanke speech last night??I found it interesting that apparently he didn’t think alot of what we consider an issue to be too troublesome…inverted yield curve, inflation, ARM resettings etc…Isn’t 10% of mortgages resetting alot..

    Maybe its just because I’m in law school but shouldn’t this guy, even though a Bush Appointee, be at least a little sanguine on the potential problems we are obviously facing..

    His words are always peppered with qualifiers like our best guess or apparently, but yet the tone is as such to suggest that he nor any other economist/fed chair is capable of miscalculation or just plain mistake…

    On another tip, the uber-bullishness is also exacerbated by generally longer term bearish commentators such as yourself and Jim Puplava from Financial Sense Online ( two whom I pay attention to) shifting their shot term views to being bullish…

    THus when “bears” go short term “bullish” who is left on the “bearish side”????

    What do you think about the fact that oil was down over $2 yesterday but indices were not up…(of course they can’t go up everyday)..

    What if there are more horrible storms this season ala katrina/rita and that Larry in Australia….Won’t NRG prices go crazy again???

    Big Picture rules and Good Luck on the new projects….


  2. clayton bigsby commented on Mar 21

    Where are the bears??? Licking their wounds and trying to meet margin calls. That’s where us bears are.

    I’m really getting bored and poor waiting for this crash.


  3. Dan Weber commented on Mar 21

    This is an interesting article, however, I don’t think the Dow will be topped out until last week in May to the first week in June. At the same time, I think gold will bottom and take off like a rocket (600 here we come!) My guess is that the fed goes for 3+ rate hikes … I’m looking at 5.25% as a minimum end point. We’re going to have lots more dollar inflation thanks the to Iranian Oil Bourse, and the fed will have to continue tightening because of it.

  4. Mark commented on Mar 21


    It would be interesting to follow up with the view from the head of Lowry’s to see what he thinks of this action. I doubt that it is inconsistent with his thesis of top formation but has his expected “top date” (March/April) changed at all? A lot of overbought indications on my screens.

  5. Robert Cote commented on Mar 21

    The real bears aren’t even shorting the market. A bear in this market is a dead bear. Why even bother trying to be smart when blatant manipulation like WLS can rise up and destroy you at random? How many bears were squeezed as GM misreported by $2billion? 9.8% of US employment is real estate related accounting for 40% of all new job growth in the last 4 years. It doesn’t take rocket science to see the coming storm but PHLX HOUSING SECTOR INDEX (^HGX) has more than doubled in the time. Any surviving bears are waiting for the bottom not trying to guess the top.

  6. Larry Nusbaum, Scottsdale commented on Mar 21

    The best period for great buys in houses? 1945-2005. However, in 1997, when Clinton signed the $250K/$500K home sale capital gain exemption, it signaled a renewed “boom” in the housing market for everyone. (and, the rates were not at historical lows at that time). The fact that the boom ran until last year was quite remarkable.

  7. B commented on Mar 21

    Well Richard Russell is a grumpy old man. lol. One surely worth listening to. Not everyone is so bullish on all of the assets he’s mentioned. In fact, I view to the contrary that the majority are overly bearish on housing, the consumer, the dollar, the general economic environment, etc. All may yet crater but there are alot of bears focused on those areas. And, I think Sauit is way too bullish on his “stuff stock” commentary. Maybe he should go back and look at what his stuff stocks did in 1974, a major commodities blow off. They were killed. PD didn’t rise above $10 for twenty years, now it’s at $90 in a chart that looks like the Apollo moon shot. Of all, I expect oil-related royalties and high dividend stocks will likely hold up the best but how the heck can you be bullish on copper, platinum, zinc, paladium, silver, etc, etc, etc.

    I saw some Hennessy guy that runs funds on CNBC yesterday. He was uber bullish. When asked about PE multiples, he actually said I DON’T LOOK at PEs. I look at…blah blah blah. Now, in the early phases of a bull, I agree. But, in the late phases, that is a foolish notion unless you are buying high dividend stocks or defensive stocks and expect to hold through any correction. DOH!

  8. ken commented on Mar 21

    Question for Clayton: just curious, how fearful are you of a “blowoff” rally that will force you out of your shorts, and thus miss out entirely on the impending crash?

    No revelations here, but I suspect that we’ll have one more vicious “squeeze” rally where the “claytons” of the world will be decimated (nothing personal, Clayton).

    I’m currently 100% cash, btw, waiting for that “exquisite moment” (anybody remember this little Cramer gem?), to short to the hilt.

  9. Clayton Bigsby commented on Mar 21

    i’m not too worried about a blowoff rally b/c i think that is what we’ve seen over the past 3-5 months and it’s about out of steam.

    i’m leveraged to the hilt. i go all in or i don’t go at all. i have three margin calls over the next 4 trading days. i’m liquidating positions just enough to meet those calls. any cash left over will likely be put to work buying put options before long.

    yeah, i know i’m early. i also know i’m always right (it’s just my timing often sucks)


  10. ken commented on Mar 21

    Thanks for your candor, Clayton and good luck. I hope “they” don’t force you out. May we all make $$$ shorting this over bloated/hyped market/economy. And for all you Bush fans reading this, NO, I’m NOT betting against America nor wishing her ill!


  11. Bynocerus commented on Mar 21

    Why do shorts hate ‘Murkah’?

  12. B commented on Mar 21

    You must be from the south. In the north we pronounce it “Murika”.

  13. B commented on Mar 21

    Oops, I don’t have a spell checker. It’s “Murikah”.

  14. B commented on Mar 21

    Oops, I don’t have a spell checker. It’s “Murikah”.

  15. todd commented on Mar 21


    Wow, that sounds dangerous! Why not wait until the market shows at least a little bit of weakness? The market is going to do whatever the market is going to do, regardless of whether the bulls or bears like it.

    I don’t like the market because our whole “recovery” is being financed by debt… War spending, deficit spending, mortgage extraction, credit card spending, etc. On top of that, I think we all know that major market crashes follow a preceding period of massive credit expansion. But does that mean the market will correct tomorrow, next week, next month, next year, or ten years from now? Who knows.

    I think the key to being a profitable bear this year is to trade weak stocks and take frequent profits. I’m up a crazy 16% this year mostly from taking short trades on AAPL and CTX. Find some weak stocks, run a tight stop-loss and cover when they look oversold. After a nice short-covering rally, jump back in…

    By the way, SIRI has been setting up a CLASSIC short entry point! It sounds cheesy, but William O’Neil’s “How to Make Money Selling Stocks Short” is a great tool to help find good short entry points. The SIRI chart today is a textbook example of when to short.

    Anyway, holding a losing position because you’re afraid to miss out on some kind of big crash is a sure fire way to lose more money than you ever thought possible. There are PLENY of opportunities for bears in this market, but shorting the market as a whole isn’t one of them.

  16. Bynocerus commented on Mar 21


    There’s a ‘raging’ debate among my friends and me as to exactly how W. pronounces America. I am of the opinion that it is ‘murkah’, while a plurarilty believes it is ‘Murikah,’ as you suggest. And yes, I am from the South, where people are proud to be ‘Goldamn Murkahns’. Tangentially, Chris on ‘Murkahn Idol’ is most representative of the average North Carolinian, whereas Bucky and Kelly Pickler are considered hillbilly trailer trash even by us simple Red Staters.

  17. CDizzle commented on Mar 21

    That Todd guy sounds pretty bright. It’s probably because I tend to agree with him. Another 2 cents worth:

    The GREED that will fuel this puppy up to its top, for me, can best be summarized by GOOG, AAPL and SNDK. These equities are a lightning rod in that we all know them and we all know what they have done. Most technical folks (I think) would look at their respective charts and sell short. This is speculation, but I think it’s a reliable assertion. I’ve been watching these three to gauge the top. I theorize that their highs in early Jan. prefaced the broader markets’ tops by 90-180 days. I postulate that they will “run back up” though not all the way to their recent highs. Further, I’ll guess that one of them will hit a high (moving forward) in close concurrence with the major indices hitting their respective highs.

    Again, just one more guy’s dart at the board.

    -45% cash-

  18. jcf commented on Mar 21

    The i in Murka is generally based on whether one uses a descriptive or a prescriptive regional dictionary. But definitely not optional is the u in nucular.

  19. Bynocerus commented on Mar 21


    Every time W says nuclear, itreminds me of The Simpsons episode when Homer helpfully “corrects” Lisa.

    “It’s nucular honey. Noooo-cu-lar.”

  20. jcf commented on Mar 21

    Carter does the same and he was a noocular engineer. Go figure.

  21. donna commented on Mar 21

    In Europe they call us “Merkins”. ;^)

  22. zack commented on Mar 21

    The bears are in my pants! Pants bears!

    Silliness aside, when I consider the myriad of crap that could go wrong – a dollar crisis, a bad hurricane season, flu pandemic, mad cow, war with Iran, 3 years of lame-duckitude, a derivatives event, housing deflation, natural resources supply shock, name a dozen more – I don’t understand how anyone could be bullish right now.

    Then consider that it’ll probably be the story currently on page 6C that nails us rather than the one on the front page.

    I’ve been investing since the late 70s and can hardly remember a time when so much potential energy was positioned so precariously against the markets.

    The only potential bull case I can see here is CapEx. For a representative example, I’m reading Garzarelli’s call: “This is the best profits picture I have seen in my career and the best corporate balance sheet ever. Capex will lead the economy worldwide this year through 2007… No crowding out in the bond market since capex will be funded primarily by internal (sic) generated funds. Tech and Industrials will lead the way and Financials soon thereafter.”

    The craven soul in me sees bear wedges in dozens of charts, wants to split the account between a Canadian and Swiss brokerage, convert everything to gold bars and oil sands. He wants to yank the steering wheel away from his sensible advisory firm and *sell* some of that stuff.

    The realist in me thinks you want to be done selling about the time the tightening finishes. He has been taking money off the table (too early, as always).

  23. IRE commented on Mar 24

    While I’m also waiting for the market to show signs of being ready to roll over — and trying to stay out of trouble in the meantime — I’m rather puzzled by the seeming unanimity here that sentiment is very bullish.

    The II Sentiment indicator just registered the greatest level of bearishness since the lows in March 2003, the ISE Sentiment Index since May 2005, most P/C ratios are neutral and RYDEX flows show a distinct lack of bullishness. And all this in the face of many indices hitting 4-5 year highs. Very odd.

    I’d love someone to reconcile the contradiction between this apparent widespread short term bearishness and the claims that “everyone” is bullish.

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