Relentlessly Bearish Fashion




The WSJ call’s em as they see ’em:

Barry Ritholtz, in his relentlessly bearish fashion, argues against the conventional wisdom that suggests today’s retail-sales report wasn’t all that bad. "One might have thought that, given all of the dollar savings at the pump, at least an equivalent amount of dollars would have been plowed back into the economy. Indeed, the new-found energy savings could have led to a wealth effect, leading to more big-ticket items — including cars," he writes. "Nope. But taking a page from the school of inflation ex-inflation, if we remove the items that went down in sales, we can reach the conclusion that sales were not punk."

I do try to "argues against the conventional wisdom."

And, I admit that I have been very bearish since moving away from the the Summer’s Buy ’em for a trade call way back in June. 

Hey, at least I ain’t short!


Update: October 14, 2006 11:07 am

Holy snikes! 

This also got picked up by the Afternoon Report, as well as Consumers Impress Economists With Quick Spending Turnaround

A WSJ hat trick!


MarketBeat: Blog Roll — Afternoon Edition
David A. Gaffen
WSJ, October 13, 2006 1:12 p.m.

Consumers Impress Economists
With Quick Spending Turnaround
October 13, 2006 11:03 a.m.

Crude Clouds
WSJ, 12:48 p.m. EDT Friday, October 13, 2006

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What's been said:

Discussions found on the web:
  1. ac commented on Oct 13

    Barry considering retail sales(thanks to Caculated Risk!) essentially were unchanged in the 3rd quarter, consumers may still be spending, but it is slowing down and last quarter, flatlined compared to the 2nd quarter. Using models such as ‘ex’ ‘internals’ is statistical lies if there was one. Even if ‘internals’ were up over Q3 less spending on other consumer items, such as automobiles, showed less spending and stagnation. I can see Mary Jo holding off for a year on the new car while the kids need new cloths and supplies for school right now. Maybe in 2005 Mary Jo could afford both, but with things tightening up, you have to pick and choose.

    Providing little in the way of new GDP nominally. Thus, saying this was a ‘decent’ report is incorrect. It was a average report showing a slowed economy.

    I think it is humerous how the econbulls are doing their best to spin data to support their biases. The fact is, the mini-boom of 04-05 is over. Now we must prepare for a weaker economy ‘how weak is always a question’, higher unemployment ‘the lag of lags’ and weaker profits ‘starting down’.

    Whats the problem? Yeah, it may turn into a full scale recession by this time next year, maybe a Roubini hyped severe recession, but business cycles are cycles. They come, they go, they move on, they begin again. So we are at the beginning of a down cycle. These can be just as enjoyable to make money in than the boom.

  2. yc32 commented on Oct 13

    Is bearish but not shorting equal to bullish but not buying? Just kidding.

  3. whipsaw commented on Oct 13

    per yc32:
    “You have been relentlessly in cash while the Dow is up 12%”

    Yes, of course, and Orwell missed by twenty years, but nobody’s laughing at him now are they?

    I don’t quite understand you cash people who whine- you don’t want any risk but you want to ride the rocket? Sorry, but it doesn’t work like that, you either accept the ~5% return that you should be getting without any risk to speak of or you roll the dice and hope you don’t take a 20% loss of capital. There is no risk priced into the market at present and it is a fool’s paradise considering the underlying risks in the economy and the lack of defined yield. Be patient and you will be glad you sat on that cash, jump in now and you will wonder what you were thinking about six months from now.

  4. Bob_in_ma commented on Oct 13

    Am I the only one who’s getting the feeling Barry’s blog is becoming centered on Barry’s blog? This is becoming a parody of of all blogdom.


    Bob, if you click the Media category, you will see I have long used this blog as an archive for media appearances & quotes, going back to 2003.

    This is different from the Financial Press category, which looks at the Press itself.

    Just an FYI. If I keep doing what I have always done, is that still self-parody?

  5. V L commented on Oct 13

    Similar to 2000 the market is ignoring all the warning signs. In August of 2000 the markets were making highs but two quarters later we were in a recession.

    Actually, it is much worst that in 2000 because now we have the biggest in history housing bubble transforming into the biggest in history housing slump; shrinking middle class; much weaker dollar (inflationary by itself); irresponsible government that has borrowed $1.3 trillion more since 2001 and 80% of it coming from outside the US (as per WSJ) … etc

    It will be a miracle if a deep and sustained recession can be avoided.

  6. diva commented on Oct 13

    well said whipsaw.
    I have to say….. I am enjoying sleeping at night these days.
    I can remember the times that I haven’t!
    Each person has to chose their own risk/reward profile… and no one ever has the ‘right’ to ‘bitch’.
    We are each responsible for our own investment decisions.
    We are fortunate to be able to read the info/thoughts of folks like Barry.
    Remember the old days……. when there was basically no real-time info available at all?
    These guys have it too easy these days….. and some of them still whine!

  7. ac commented on Oct 14

    No, what Barry is saying, not as many people are going to the gas station and buying cars. Actually, the lower station sales are a good indication why Oil has fallen. Retail sales are what they are. Stagnent. Using ex that or internals this doesn’t help us make a informed decision. The econbulls would spin it some other way if the ‘internals’ came in weak and auto’s came in strong. Bias creates emotional instability which causes bad analysis.

    Barry looks through the data and makes a decision, right or wrong like with his stock call.

  8. Philippe commented on Oct 14

    I thought that the basis of investing should be sustained by quantitative factors like macro and micro fundamentals and.. luck, what is now offered to assess is a “pavlov” behaviorism driven by the 50 days moving average which has been replicated IN EACH STOCK MARKET IN EUROPE (the Spanish market indice has been moving 10 PCT UP since July ON 3 STOCKS..)
    THERE IS NO RANDOM FACTORS IN THESE MARKETS, it is a unidimensional world of investment and I am affraid that what can be “organised” on the upside with no reliable quantitative reasons for understanding can be organised at some point of time on an extreme downside with the same absence of reasons.
    I share Barry’s concern the argument is not that the world stocks markets are all up and showing the same pattern, but for present and future use, WHY ??? and the debate may be long…

  9. Caver commented on Oct 14

    What kills me is all these people who have been “in the market” since August (supposedly) and are laughing at me for being in cash act like they will all get out before they lose anything.

    All of them on this blog and every other blog I read are all going to make 12-15+% off of this “rally.” It is just not going to happen. The fast money is going to trade down some day after hours, and you’ll wake up the next morning down 5%.

    It IS a sucker’s rally in the sense that Wall Street is trying to draw in all of Main Street’s money. They’ll keep the rally going long enough to do that. And then, some arbitrary day, when they can show a particular return for the year they will sell and leave you with the bag. We are in Q4…don’t overlook that.

  10. cm commented on Oct 14

    Not sure whether and how this ties into the picture — a number of local Valero stations have started labeling different cash/credit prices. I have seen 3c and 6c differences, with Regular at around 2.40. That would be 1.2-2.5%. Not sure whether it is to discourage credit cards (card fees), or attract cash customers (from cheaper no-credit stations).

  11. Mark commented on Oct 14

    Return of “The Sweater”!

    Hope everyone took a peek at Friday’s ROB-TV interview with Barry where his sartorial splendor was in full display as he nattily combined “The Sweater2” into his fall ensemble. Not quite as visually stunning on his frame as the original version which featured dark horizontal striping against a white background– think Moe in The Jailbreak episode of the Stooges– but pleasing nonetheless. The Nixon 5 o’clock shadow that plagued the first introduction of The Sweater to the adoring public was also an improvement by its absence.

    The Sweater2 will be available for only a short time! Order yours today!

    Mark McCormack, President
    The Sweater Marketing Group LLC

  12. Incognitus commented on Oct 14

    The point is, retail sales “all inclusive” are not growing NOMINALLY.

    You can guess what that does to the GDP in REAL terms.

    (REAL – deflated – retail sales are already falling at a nice clip, it seems)

  13. traderb commented on Oct 14

    This blog (whilst excellent) seems overly 2-dimensional…it is all fine and well to be “bullish” and “bearish” (i am generally in the latter camp), but I think we need to talk individual stocks more.

    Whilst it seems a slowdown is coming, and a general slowdown in earnings COULD hit stock indices, there are plenty of good stocks out there worth owning that will grow profits and market share even in a slowdown/downturn.

    I have been short S&P/DOW for a long time, and long individual stocks like Intel (new Windows and Wi-Max means PC sales => chip sales will be increasing for the next few years), Cisco (video-over-internet expansion means you HAVE to own the company that essentially BUILDS the internet), GM Corp (market WAY too bearish on ability to turnaround, company hence 50%+ increase from lows this year), IAC Corp (undervalued that will increase market share with a product that is better presented than Google), etc. etc.

    Even if you are bearish, there are rationales for SENSIBLY being long SOME stocks, either outright or against being short indices or other stocks (e.g. like banks, which I think will struggle in housing slowdown and inverted yield curve).

    Lets get more into the details if we are going to have heated discussions on the direction of the market! I’m sure everyone reading this blog is after ideas of how to actually make some $$$ in these markets!!

  14. Barry Ritholtz commented on Oct 14

    For the record, I am long numerous individual stocks — in addition to the aforementioned oils, I have numerous other ETFs and a few small spec trades. And a boatload of shares in a small tech company I am on the BoD of. I am even long Oracle, a tech play.

    However, given the litigious nature of society, there is little to be gained posting the buys and sells here . . .

    You guys should feel free to do so, however.

  15. bushsux commented on Oct 14

    I agree with whipsaw. Cash is not trash this year if risk is considered. Folks, don’t look in the rearview mirror and focus only on reward/returns missed. How much risk are you going to take and is the upside worth it? This is a totally personal and individual decision. Don’t blame Barry or anyone here if you, that’s YOU, get it wrong. Find someone great to manage your money if this calculation is not your thing or go vanguard. Just my opinion. Mark, stop pumping the retail economy with your irresistable hyping of the sweater, I will take a dozen. As for stock ideas, I have a doozy—-is GE a short sale here for a quick trade???? I feel like I have just written something naughty on the side of a church. Forgive me, but look at the chart and tell me what you think. Good weekend to all.

  16. alexd commented on Oct 14

    Every time I write something long I cannot pass the turing test on this blog. I presume that the computer knows something I don’t.

    Focus and time. There are aspects of the economy that are tighly correlated to other parts. there might be a correlation to gasoline prices and causal dining. Maybe vacations. Gift purchases. Purchases where price range and perception are easily changed by having another 20 bucks in the pocket.

    Also on the housing thing there is a lag aspect . Not every mortgage that will go up will go up at the same time as others. Some people will refi and make it work out. Some will sell and move, some will walk away from their debts. Some businesses like banks and housing companies will eat those losses. And curtail spending in the future or direct dollars into less riskey or areas that are considered more viable. So although there might be an overall trend the whole is a sum of it’s parts and one can make money off of the parts working on a micro basis rather than a macro one.

    Be well

  17. Paul Jones commented on Oct 14

    Does an American slow down necissarily mean that the Dow companies become less attractive investments? These companies are big because they have proven can weather the storms that come and go in the business world. Heck, if they can’t then they are yanked from the Dow! Also, they are multinational, thus America can have hard times but other regions might do well. The global economy does not act in true synchrony yet, which is a good thing.

  18. Mark commented on Oct 14


    I am so very happy that someone has recognized the absolutely COMPELLING value and taste in this item. Please provide credit card and mailing information and I will rush them to you. As you know, fully one half of all profits go to Mr. Ritholtz’ favorite charity– the Society for Humane Extermination of Irrational Bulls.


    Mark McCormack, President
    The Sweater Marketing Group LLC

  19. DavidB commented on Oct 14

    However, given the litigious nature of society, there is little to be gained posting the buys and sells here . . .

    You guys should feel free to do so, however.

    I guess it’s time to again suggest that you start up a stock picking contest Barry. That would solve eveything. It would also bring up a lot of healthy debates as to why who picked what

  20. Philippe Rafat commented on Oct 15

    ” The further up the monkey climb up the pole and all you can see is the hole of his ass” may be aplicable as a symetric to the proverbial falling knife ???

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