Where are the Bears (And why are the Bulls so insecure?)

Is it just me, or have all the Bears been treed?

The Bulls are in chest-pounding glory. I feel like the last salmon-eating, hibernating, reality-based observer, who, according to the WSJ, writes in a "relentlessly bearish fashion." Guilty as charged. The caveat is that in October 2002, I was called a "hack perma bull".

My email hostility-o-meter has moved from yellow to red (but still has more room before its pinned), the trolls and sock puppets (new word for me!) have come out hiding. I keep hearing about the excess of Bears, but I neither see nore hear them anywhere. Sentiment is gloriously bovine.   

Examples? Here’s a selection of some recent RM commentary:

Shut Up and Run With the Bulls

Bubble in housing bubble-talk going limp?

Long, leveraged, locked and loaded

Buying Gets More Intense

How much does this market want to go higher?

And here’s the ironic thing: the Bulls are so unbelievably insecure, you would think we were at Dow 2000, not on the cusp of Dow 12,000. Given how far and how fast this market has rallied, I have never seen a group of more insecure bulls in my life. 

Even Jim Cramer exhorts (I assume tongue firmly in cheek) to his bullish brethren to Celebrate the Market, Quietly. "OK, I will go be quiet." he says. Is that sarcasm, or fear of offending the trading Gods? 

It is as if every challenge to the mainstream data or bubblevision spin is a threat to their collective manhood.

Hey, don’t be so defensive. The Dow is at all time highs, and you Bulls act as if I am accusing you of having tiny wee-wees. You remind me of the stand up comedienne, who everytime she sees a 50-something year old guy in a shiny new red Corvette, waves and yells, "Sorry about your penis!"

The Bullish argument is carrying the day, the market is up, Up, UP, and you guys are winning!  Why so tentative? What is it that your lizard brains know that your frontal lobes hasn’t consciously accepted yet? Gee, you would think the market is setting itself up for a shellacking, the way you are so self conscious.

Seriously: There are almost no Bears left standing. Enjoy yourselves — its party time! Party like its . . . well, you know that song…

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What's been said:

Discussions found on the web:
  1. Barry Ritholtz commented on Oct 14

    Both references to Prince songs were strictly intentional

  2. ab initio commented on Oct 14

    You know the bulls like to climb a wall of worry. Better to keep the worry wall high so they can keep climbing.

    Its the classic – momentum begets momentum. What me worried about fundamentals! Yeah, we are getting out of the scary Sept/Oct period into the perenially bullish Nov-May period and getting into the very bullish 3rd year of the presidential cycle.

    Oil is down. Gold is down. Tech is up. Fed benign. Give me more beta!

  3. wcw commented on Oct 14

    Not quite true: put-buying is increasing, at least if you believe the ISE’s data. Cf a quick chart (PNG); call buying has been drifting down all year, though it has turned up a little lately.

  4. fred commented on Oct 14

    Where are bears when you need them, the market is being completely hyped at the moment. Statistics show Sept and Oct as really bad months for the market, well in sept/oct the markets did well. What makes everyone think that the “bullish Nov-May period” will be bullish. ANYTHING CAN HAPPEN.

    Wait till the bears get back to work, these gains will disappear very quickly, the talking heads on cnbc should keep their mouths shut..

  5. Michael C. commented on Oct 14

    Wow. Emotions are definitely swirling on both sides.

    1) This must be something truly unique. Chest pounding bulls but at the same time insecure? It seems akin to a wall of worry?

    2) “Sentiment is gloriously bovine.” – I would have to disagree here. Yes, I’ve read the articles and heard the CNBC cheer leading. So there is a good amount of bullishness out there. But most of the sentiment measures (ie. AAII, II, etc) have been much more extreme than it has especially given where the market is at. I think one reason is despite the bullishness, cash has been slow to follow the bullishness. People are bullish but do not seem to be putting as much cash to work as would seem by their bullishness. Your post would seem to confirm this as you ask “why so tentative?” Is this good or bad?

  6. DD commented on Oct 14

    you know b, we are all a little insecure…

    btw, we just fixed the budget deficit…didnt you hear? :)

  7. docdan commented on Oct 14

    B, I read your blog for your clear and documented thought process. I do not expect you to be right all the time. I do expect you to be original, consistent, and intellectually honest. In that regard you’re doing a terrific job.

    WRT the bear suit that’s been put on you by media types, I recall late 1999 when another original thinker, Jim Stack, was called a “perma bear” because his newsletter went 100% cash. His subscribers, myself included, missed the blow off….and also 2 years of perma losses.

  8. DD commented on Oct 14

    they don’t have him bear (bâr) for nothing…all of a sudden.
    but I’d bet you are a lot more circumspect off camera.

  9. anon commented on Oct 14

    Right now I’m seeing an interesting pattern: over the past 2 or 3 weeks, a lot of long-time permabears and “contrarians” have thrown in the towel and suddenly declared that the market looks set to keep zooming higher. Marc Faber, Bernie Schaeffer, Doug Noland, etc. So have several of the regular posters here. Even Mr. Ritholtz, usually unemotional, is starting to seem fatigued! Sure, bearish sentiment may not be at its all-time lows, but it’s dropped dramatically and the bears left out there don’t have the self-assurance they once did.

    This is anecdotal, I know, but seeing the bears so worn-down makes me think we’re getting close to the top.

  10. alexd commented on Oct 14

    Watch ads

    I mean ads that sell expensive watches like the ones that Barry wants us to gift to him. Thses things are expensive toys that show a rather relaxed approach to dollars. Expensive toys that are not about time keeping. Expensive ads for expensive watches means that some people are not worried about money. I think it means be carefull what you buy, and look to things that might work well in an adverse situation.

    All you macro heads wating for a crash are boring. Why not speculate on something wonderfull happening? It’s about a point of view. Eventually you will be right. Eventually something wonderfull will happen. But when?

    There has been specultion via Kurzweill on what will happen to govt./civilization as we know it, when human brains link up with computers and sources of information. The only thing we know for sure is that things will not be the same.
    Please do not present the, that might happen but not in our lifetimes, argument, for the rate of change and work going on in this area is great.

    There seems to be a bit of rear view mirror thinking going on here. How about some speculation on the future in ways that do not simply dress the past up in new clothing?

    Something as minor as if we no longer needed something what would happen to the market? Or if politicians were held accountable how would that change gvt?

    What if batteries that could charge up in 10 minutes and allow a car to go 500 miles were economicly created? What would that do to the companies that make parts for cars?
    How would that effect those who build ships? What if we double the efficiency of energy transmission? See?

    A set of possibilities and actions on many different scales might be viewed as preparation even if most of those scenerios will not happen? Also my neurons need the exercise.

    “I just had my brain washed, and I can’t do a thing with it!”


  11. Eclectic commented on Oct 14

    The market is a bridge.

    It doesn’t know or care whether you’re bullish or bearish, and it doesn’t care what that ratio is.

    It doesn’t care if there’s a party on the other side… and that many at the party are thumbing their noses at you for being a coward and not crossing the bridge to join in the fun.

    It doesn’t care if you’ve already made it to the party… or if you’re half way across… or if you’re on the approach and trying to decide, or if you’ll never cross the bridge.

    It’s neither happy nor sad, whether you’re fortunate or unhappy. It doesn’t have a memory… It doesn’t feel revenge or euphoria nor does it require justification.

    It only knows it’s a bridge and what its destiny will be.

  12. Nick commented on Oct 14

    Hi ! Today I wanted to destroy the myth that we are in a secular bear market. Here are the arguments backing the fact that we are still in a secular BULL market:
    1) The Dow Jones, the Dow transports, the Russell have printed new all time highs
    2) Only the Nasdaq and S&P are still below their 2000 highs because they have a heavy weight in tech stocks.
    3) All emerging markets are at new highs
    4) Even with the recent pullback, commodities are very strong
    5) base metals have not corrected that much, indicating a strong global economy.

    Frankly, I think all this sure doesn’t sound like a bear market to me. The global economy is booming and US companies are making tons of money. I didn’t hear any good arguments for the bearish case. Bears are always repeating the same thing over and over again, like the housing bubble, deficit, debt…….Face it bears, you got it all wrong, time to reassess your position.

  13. DD commented on Oct 14


    We appreciate your enthusiasm but I regret to inform you that we live under the govern of people who do not believe in science. the atom bomb was put here by g_d, it had nothing to do with physics. which is actually discussed on page 32 in your creationism 101 syllabus. we also take offense to the fact that you think we have money to fund proper education or even care about the proper education of our children when we have more pressing issues like building federal highways. anyway, though we do appreciate your concern.

  14. jj commented on Oct 14

    with 3rd and 4Q GDP #’s falling to less than 2% , earnings may fall in 2007 even though most strategists are looking for 6-8% gains in S&P500 earnings …. the question will be how will the Fed’s possible rate cuts in 1Q 2007 jibe with earnings decline … I assume the play will be long CMR / short CYC and long TLT … time will tell

    when I see bears such as Trahan become more bullish , I start seeing the last of the bears throwing in the towel …. he will be proved wrongly bullish with his sanguine estimates for 2007 as he was wrongly bearish this year

  15. DD commented on Oct 14

    Do you not think we have almost killed any hope of leading or taking charge of what the world is becoming, now and into the future. making civilizations more efficient and cleaner if for no other reason then simply being able to continue to inhabit this planet (Kurt Vonnegut calls humans a syphilis on the face of this planet)
    we dig stuff out of the ground and BURN it. Then we cut down trees and literally wipe our asses with them. so lets see we dig stuff out of the ground and burn it, then we wipe our ass with a chopped down tree. Do you think the fluffy toilet paper comes from the healthier trees and that rough stuff is from…I bet you the whole process was moved to the place were it was cheapest and easiest to pollute. You would be better off thinking about things like this rather then GDP being up 1.5% or negative 1.5% because if you don’t…you will get cancer and die.

  16. jj commented on Oct 14


    what we want to know is , can we make money on those trees or not ????

  17. km4 commented on Oct 14

    Fundamental Disconnect on strength of US Economy

    It seems to me that it is impossible to have it both ways, you shouldn’t have a strong economy and massive budget deficits. If the economy can’t withstand the tax increases necessary to pay current expenses, it is by definition not strong. If the economy is strong, it should be creating budget surpluses.

    We know there are going to be major fiscal crises in the near future (retiring baby-boomers, declining oil production). These are the best of times with baby boomers in their peak earning years. If we can’t balance the budget now what makes us think that we can balance the budget (and pay off debt) in the future.

  18. jj commented on Oct 14


    have you paid off your credit cards ? your student loans ? your mortgage ?
    can you live within your means ???

    the deficit this year was less than 2% of GDP , lower than 22 of 25 OECD countries

    DEBT / GDP is 65% in the US vs. 66% France , 68% Germany , 160% Japan

    while you may or may not agree on Keynesian fiscal stimulus , all of these countries are still surviving …

    the economy and the markets don’t always collate ——- the fact that LBO’s and MBO’s take $8B / week of equity out of the markets on average this year , and Corporate Buybacks take out $1B / week may be a bigger factor affecting the markets than those that weigh on the economy

  19. DD commented on Oct 14


    um yes…the fact that we dont care about the earth as we expand and the number of people using these resources around the world expands(rapidly) they become ever increasing in value. Buy what we need but there isnt that much of. Trees are not bad, lumber for housing and other construction…water is probably better. we like sweat baby…not some index tracking fund.

  20. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  21. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  22. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  23. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  24. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  25. tj & the bear commented on Oct 14

    Keep drinking the Koolaid, Nick.

    Face it, Wall Street loves stealth inflation. Sales, revenues, earnings all rising steadily… not because of better business, but cheaper dollars.

    Take all those nominal reports and deflate them per the PCE (not the fictional CPI) and you’ll find things aren’t so rosy.

  26. zell commented on Oct 14

    The bears are where they should be now- at the dance. The bulls are high on highs, getting adolescent in their triumphalism. You can’t have a decent bear market till nearly all are full of bull. Bulls, in the last stages of their reveries get giddy in reaction to their underlying fear of heights – the higher the flight- the thinner the O2. That’s where the silly season sets in.
    You gotta go up to go down and while the liquidity is still there it’s hard to look down.
    It’s an old saying: that you really can’t recognize a bear market till you’re in it. Higher costs will slowly saw away the limb that the bull has climbed out on. The bull will tremble as it takes a peak back and the plunge will only take place when the bull realizes it doesn’t belong in a tree.

  27. Test commented on Oct 14

    Only market can be always right, so you know who are wrong: thoese are making complaints right now.

  28. Mike H commented on Oct 14

    Well, the current run-up seems more the classic case of impatience on the “would-be-bears” – no one wants to miss out on a great party, right?

    All the talk about “soft landings” and the housing bubble not overflowing into other markets is PREMATURE! These things don’t necessarily unravel in a few months, in fact things can stay “fine,” albeit fragile, for a long amount of time before “it finally hits the fan”… For all I care, go party with the bulls, but be very careful or you might wake up with a terrible hangover.

  29. S commented on Oct 14


    None of us are tree haters. Trees are good.

    But when a man’s gotta wipe, a tree’s gonna have to take one for the team.

  30. donna commented on Oct 14

    Trying desperately to draw in the greater fools…

    Problem is, when the rich have made off with all the money, there are no fools left with money to invest. ;^)

    Shoulda left the middle class a little ray of hope, fellas.

  31. sharkbait commented on Oct 14

    The markets can stay irrational longer than you can stay solvent.

    – Maynard Keynes

  32. scorpio commented on Oct 14

    hey, i drive a red corvette and i want everyone to know, what they say is NOT TRUE. serious.

  33. Chief Tomahawk commented on Oct 14

    Hey, if things are so good then why are 45 houses about to be auctioned in Florida with a starting bid of $1???

  34. advsys commented on Oct 14

    Nice sentiment Docdan.

    Tech bubble, nasdaq bubble, housing bubble. Now a stock market bubble? (maybe its a large cap bubble?)

    Bubble in the psychological sense. ie. when any and all bad news gets interpreted as good news.

    Are we just stuck in some kind of bubble mentality?
    When one ends we find a way to create another?

  35. Hank G. commented on Oct 14

    The level of complacency towards risk and lack of bearish caution is evident in the incredibly and consistently low, low, low level of the volatility index.

  36. Neong commented on Oct 14

    Mr. Big Picture is a theorist not a trader. He is so bearish but he is not shorting! He claims that short and wrong can be fatal. What a logic!

    If we are certain we will do it: long or short. If we are wrong we get out and try again.

  37. DD commented on Oct 14

    The 10-week moving average of the percentage of Bears is currently 36.97%. The 10-week moving-average of the percentage of Bears was 43.0% at the major bear market lows during 2002.

  38. alexd commented on Oct 14


    thoughts. You have to see something to hate it. If you see it it is due to your physiology. If you think about it it is due to your mind. If you have a pov it is due to your approach to things.

    The world is our mirror.

    You have mistaken the idea of intelectual speculation as one of being excessivly optimistic.

    You guys are so silly! Does everyone who posts think you can only go long? If you are short and the market goes down you are in your own personal bull market.

    I think the question is is your position good, is it making money?, will it likley continue to make money?

    Fascination with either being a bear or a bull is limiting. Try to be correct more than you are wrong and above all bet in such a manner that you can profit off those bets.

    Controll what you can control, do your best.

  39. Aristotle commented on Oct 14

    The party ends November 8

  40. mike99 commented on Oct 14

    Seems like this is a no win situation, i was short the markets and did miss out on the run. Reason being is seeing interest rates rising, high inflation and the threat of housing collapse had me thinking stay bearish things are going to drop hard.
    What happened in May when all of the sudden out of no where the market tanked and everyone was running for cover. I remember that day in June going long day after day only to see stocks drop harder and harder. I kept saying things are oversold and ready to run. I was right about 2 months later, everything worked out great.

    I went bearish in July and August right before the next run in late August. The run has continued with absolutely no Pullback. Only catalyst for this market is lower oil and gas prices and interest rates staying at 5.25%. Earnings are the next catalyst than can push this market even higher, how high is anyones guess. I do feel like taking on more long positions than short positions, but I have made mistakes in the past following the crowd.

    As for the Dow, it seems to be looking overbought more and more each day, the RSI is showing massive overbought levels, but like the saying goes overbought can get more overbought.

    I think the prediction of a softlanding is a little to early to tell, I dont think a correction in housing prices takes 3 months and then fixes itself where prices are going to gradually move higher. I think that once people realize of how much weaker the housing market looks it will be too late.

  41. Jeremy commented on Oct 14

    Hold on. The next leg up is coming.
    Bulls will be on a tear once 3Q GDP
    comes out. Great numbers for sure.
    (Ex-retail, ex-manufacturing, ex-housing,
    ex-foreign trade, ex-wives etc)

  42. Bynocerus commented on Oct 14

    Some time back, I was kicking myself for not hanging on to my emerging markets exposure longer. Then, this summer, as Mexico collapsed, I was reminded of why I had gotten out.

    But then, the other day, I looked at the iShares Mexico ETF, and it was up nearly 100% in three months.

    And the REIT etfs were at new all time highs.

    Like Barry, I am ideologically a bear at the current time, especially given market valuations and the fact that after three years of bull market we still have yet to see any new leadership. Old leaders have fallen off, but housing and emerging markets continue to carry the day. And, I too have thought about throwing in the towel lately. That knot in my stomach is about the size of a small sumo wrestler right now. Of course, every time the knot has gotten this big and I’ve though of capitulating the market was about to reverse. Wonder if we get a big pop Monday that gets faded like crazy and next week marks the beginning of a “temporary correction” that turns into a full blown correction that sees us at Dow 7200 again in a year.

  43. mike99 commented on Oct 14

    Bynocerus I hear what your saying about how the old leaders have fallen off, they have. Articles were circulating that more than half of the dow 30 stocks were still off from their highs set back a while ago.

    As for EWW yes I follow that one, I remember in April and May when it ran up 42, then out of no where the collapse came sending EWW down to around 32. Also follow EWZ, EEM, EZA, and EWJ just to name a few

    As for the knot in your stomach I feel the same way, its getting bigger each day this market rises. I think if we see one of those days where we rally hard and then 2 hours into the closing profit taking occurs and all indices fall off 1% or more that that will mark our top.
    As for 7200 I dont think that anytime soon. 7200 is pushing it, I think the only way we get 7200 is if we come in for hard landing, foreclosures surge, oil goes pass 85+, unemployment rates jump to 8%, inflation gets out of control. I can tell you 30-40% of the jobs created in the last 5 years is from the housing boom, once this slows there is going to be massive layoffs until then we have to watch the dow skyrocket to new highs.

  44. V L commented on Oct 14

    Serious Question:

    Professore Roubini from NUY is convinced that the housing slump will be the worst in history, US consumer is drained out, recent wage growth is artificially inflated by stock options and job creation has been dismal. Moreover, he has been convinced that the Fed will fail to prevent a recession in 2007.


    Can anybody state any logical arguments to the contrary? I have not heard any so far.

  45. ari5000 commented on Oct 15

    Rally ends Nov. 8.

    Right on.

    Anyone who thinks the market is “too big” to be manipulated does not know what he is talking about.

    This is why Barry’s getting the hate-mail. People think the buyers represent real demand for equities instead of a game played by the U.S. Treasury, Goldman Sachs and various Central Governments.

    Record indexes
    Oil is cheap
    Gold is worthless
    Housing prices are stabilizing
    Inflation is finished
    Debt is decreasing

    Right before a major election?

    Although I tend to think the unwinding will begin a bit sooner. The first 100 points down won’t have much impact on voters. It’s the 500 point drop on Nov. 9 that will shift the psychology.

    To prove this thesis: Based on the extremely difficult sentiment caused by Foley and others causing voters to second-guess — look for a MAJOR military threat / event within the next two weeks either against Iran, terrorists (anywhere) or North Korea to shift attention away from scandal and reiterate one last time the uber-motif: Fear is Everywhere, Republicans Will Protect You, Liberals are Pussies.

    All the talk about Bulls and Bears and capitulation is moot. There will be no need to support indexes after Nov. 8. The nasty drop commencing mid-November should make it abundantly clear. But until then, Dow 13,000, here we come!

    Barry: Save all those emails. At the end of November, just respond en masse with: You Were Saying?

    But I could be always be wrong.

  46. mike99 commented on Oct 15


    agree with most of what you say….

    the drop on november 9th is doubtful unless the democrats win and the markets tank on this news. As for Dow 13,000, is that before November 8th, haha

  47. V L commented on Oct 15


    Are you suggesting that Hank Paulson and George Bush are using Goldman Sachs to short sell oil and gold, to screw commodity speculators and hedge funds, and using the profits made from these short trades to pay off our country debt and to prop up the Dow; also, as a result brining down commodity prices and lowering inflationary pressures?

  48. Cherry commented on Oct 15

    The funny thing about housing is, it is having a awfull October. Literally. The next phase of the decline is here and nobody finds out to it is over. The rush to the exits is picking up speed fast………………………

  49. samuel commented on Oct 15

    The reason the market keeps going up is because of the massive debt bubble and leverage in the US economy. At some point. the debt bubble will collapse like all bubbles do and it will be a disaster.

    Someone posted a national debt to GDP ratio and claimed it was reasonable. But that is not the important ratio. You need to look at total credit market debt versus GDP and that figure is over 300%. It’s massive. This debt bubble has inflated all assets and has kept the economy going.

    I don’t know when it will pop, but ned davis has stated that 4.8-5% on the 10 year treasury is all our overleveraged economy can handle or it will slow down.

  50. bob commented on Oct 15

    I think the bubble has something to do with elections. Those guys can pump money into the system, and it looks like they do.

    About credit bubble, read this article:


    about the guy who purchased a $1 million mansion and never ever did a penny of payments. Essentally he is living there for free for half a hear and it will be another few months before they kick him out.

  51. yertlert commented on Oct 15

    I used this current rally to sell and I am now in cash looking to buy puts. Am I lucky or missing a much larger move to the upside…….not sure. I do know this, my descisions are based on a number of factors which I see discussed here, and on alot of other sites. But I also make observations closer to home.

    In my happy bubble community folks are quietly beginning to suffer financially. It is not talked about but you can feel it. Donations to schools are down 50%. The local gardening store which usually never has much inventory is marking down plants to prices I’ve never seen and they are still not selling. A couple of housing developments that were already started have been abandoned and the lots are left empty with the only signs of growth coming from weeds. I hear comments of how homeowners can no longer afford their mortgage but we all have higher taxes due to bubble home prices. Those same homeowners are turning to their retirement funds for resources to keep the homes they live in and keep their kids in the ideal town. I look into friends and neighbors eyes and I see their fear. These are good people with kids trying to make ends meet and it’s not getting any easier for them. They may buy some new clothes for their kids but they’re not buying new cars or putting additions on their homes or having their kitchens redone.

    One only has to observe their local surroundings to make conclusions of how the economy is really doing. Dow 12000 does not make them feel any better. They could care less about GDP. These folks are slowing their consumption wil contribute little to the growing economy! Company BB’s does nothing but help p/e’s. The underlying fudamentals don’t change. Cash flow is cash flow. Those statistics are deteriorating. Am I lucky……not sure. But I sleep better at night.

  52. bob commented on Oct 15

    After reading all the posts – it seems there is no real bad news except housing bubble. Everything else is neutral or bullish. Add here some money pumping before elections.

    But from the housing front the news are pretty bad, and sept was much worse than October.

    Not many markets are affected yet. The real price decline happened only in San Diego, Bosto, Las Vegas and Miami. But:

    San Diego prices are -8% from the peak
    Boston -6% from the peak

    In Las Vegas and Miami sales dropped so much that it is impossible to tell how much the prices declined.

    The market is bullish because Los Angeles and New York real estate are still in the green.

  53. long time bear commented on Oct 15

    i’ve been a full time trader and i’m sick and tired of the lies. right now the market must keep the illusion there’s still tons of bears out there to keep the party going. truth is there’s few bears left. this 1300 pt 11 week rally killed the majority. look at the frying barry takes on tv every time he mentions being cautious. and barry’s a very polite not so short term bearish person. heck it’s time to roll out bill fleckenstien and david tice to act like many are bearish.vix at 10.80,put to call is pegging .8(and most of that is hedging) and 99.9% of the people on everything from cnbc to fox going wild bullish. yepo that sounds real bearish

  54. andre commented on Oct 15

    Barry et al,
    few points:
    * I do think, on average, you tend to be more bearish than bullish. But this opinion and nothing to get pissed off about!

    * IMHO you may want to consider creating/publising a forward looking outlook measure on the markets and sectors – it will allow you and others to objectify sentiment.

    * also IMHO, you may be bearish (last 10 months since I started reading your blog), but I believe you are right:
    sure for the past 1/2 year things have been pretty rosy at the given time — but the market is a discount mechanism, forward looking (we should hope) — and looking forward (as you have been) I see:
    (a) risk of hard landing from housing (.4 probablility) with ripple effects throughout the economy (the fall of miami has yet to play itself out — wait 18-24 months for bottom there)
    (b) inverted yield curve, telling of recessions in past (.6 probability)
    (c) Morgtage Equity Withdrawls WAY up (see federal reserve.gov), coupled with housing increases as driver of slowing personal spending…. which MUST decline in face of rising rates and declining home values — which will slow consumer driven economy…(prob .8)
    (d) new trend in energy: “just in time” energy with 84.5MBPD produced and 84MBPD consume; continued oil volatility with support (via opec and fundamental supply/demand issues) in $56-58/bbl — all indicating potential new long term trend of higher energy prices (creating drag on economy, inflation pressures etc) [prob .7]

    I could go on but these are the biggies…while its a bit simplistic – it doesnt bode well for corporate earnings and P/E’s over next 18 months.

    …we can always point positive trends, but IMHO, for the moment – these bearish signals are real, not improvised by perma-bear types.

    as for a perma-bear label on yours truly – BTW – I am bullish in other economies – namely I have a property development and real estate investment company in eastern europe — the writing on the wall is clear; strong values & fundamental growth, EU convergence, reducing risk, growing asset values, etc — its an obvious growth market in real estate for the next 5 years +

    …so you can see, I am not a perma bear…. just trying to finding the right “spring” to invest in and being cautious in the face of a cooling economy and likely approaching winter season.

    I agree with barry, its cooling off in the US.


  55. Joe commented on Oct 15

    Barry you have a tremendous amount of egg on your face with some of the ridiculous prognosticating that you have done.

  56. Jack commented on Oct 15

    The real estate bubble is over and people have to have some place to put their money. They are currently putting it in the stock market (again).

    As Sharkbait quoted Keynes above: The markets can stay irrational longer than you can stay solvent.

    Look back at the stock market collapse of 1929. It ran up on speculation to absurd levels before a top was in place — even at a time when consumer debt was comparable to today…

  57. Bruce Sherman commented on Oct 15

    “Barry you have a tremendous amount of egg on your face with some of the ridiculous prognosticating that you have done. ”


    The question is whether Barry has been wrong or just early. I find it difficult to argue with his analysis of the fundamentals. The market, on the other hand, seems to be pushing higher mostly on momentum and speculation. Investors seem to be discounting all risk and pricing perfection into the economy and the market.

    In addition to all of the issues Barry has raised, I would add that a stronger than expected Democratic victory could be a real downer for the market in 2007. Rangel as chair of Ways and Means, Conyers threatening investigations and impeachment proceedings, and at some point investors will realize that the capital gains/divindend tax cuts will be history after 2010–this will not be a good thing for the stock market and dividend paying stocks, in particular.

    In short, I am having a tough time coming up with a likely rosy scenario for the market in 2007–even though I would personally benefit from one.

    Joe, if you can give me such a rosy–and likely–scenario, I would love to hear it.


  58. cButler commented on Oct 15

    To the bears –

    1). Comparisons to 1929 or 2000 are not valid here. PE doesn’t count because PE does not contribute to the valuation of anything in a bubble. Having actual earnings may be a drawback, in fact, because it shows that a company has limitations, and nobody wants reality in a bubble.

    2). Bubbles are characterized by an extreme lack of consensus over the current value of a listed company. Graph some sort of measure of the difference between the highs and lows over some short term period through a long market history. The S&P has been cruising at the low range of that measure for more than three years now.

    3). Money withdrawn from inflating house values supported record personal consumption as well as record stock prices? Everybody with a house bought and fed an SUV and provided a family with a new house, 6 playstations and a 42″ flat panel, and then invested in the stock market? OK.

    4). The great power of the ETF revolution is it’s ability to make a market go up without affecting the relative valuations of the components. In an environment where you can only buy individual stocks, you choose between stocks. The one you buy encounters demand. The one you don’t doesn’t. Buy an ETF and they both do, in exactly the proportions dictated by the market on that day. End result – the appearance of limited participation or breadth.

    5). Oil money. Where’d the profits go? Don’t forget that much of that accrues to states that function as investment funds.

    To the bulls –

    1). You’ve been right most of the time, but you still fail to convince. That would be mainly because of the normal shrillness of your rhetoric, the preponderance of charlatans in your ranks, and the incredible lack of command of the basics of reasoned argument and historical fact (not to mention that of the English language, also), displayed on a regular basis in your rants.

    2). Bulls don’t want to hear the bears because the bears are discussing risk. Risk? What’s that?

    Markets rise in spite, not because, of the bull argument.

    (I’m long, by the way, until Tuesday’s close).


  59. phil commented on Oct 15

    “Barry you have a tremendous amount of egg on your face with some of the ridiculous prognosticating that you have done. ”

    Is that you Joe Battapaglia? Give it time, BR’s forecasts are based on sound logic and deduction and IMO he is just early.

    I do have to take BR to task on his comments that he’s up less than the S&P 500 but w/ less risk, that type of performance can be easily replicated with a simplistic option strategy-

  60. mentalmodel commented on Oct 15

    The ads do tell a story. In financial services it’s all about the client, and they have to tell people what they want to hear. Maybe it’s me, but I don’t see much advertising that concentrates on the nest egg stewardship on offer in times of uncertainy (ship navigating foggy waters motif). More like “you can do this”.

  61. Joe commented on Oct 15

    I usually just glance at TheStreet.com and my sense is most writers there have been and continue to be quite skeptical of this rally and for every bullish headline you highlighted there are equal amounts or more of bearish or cautious headlines on the sight and anywhere else I look. That is the main reason in my mind this market has been stronger than anyone thought it could be. I don’t know one pundit/MM/trader whatever who was particularly bullish beforehand about this period we are in now.

  62. mentalmodel commented on Oct 15

    Does anyone know of a time series plot of IPO (both number and funds raised) activity over the past couple of years? I’m assuming there are indices for these on the BBG somewhere.

  63. JGarcia commented on Oct 15

    I’m praying for a pullback…anybody else?

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