Doug Kass wrote this prior to this week’s action — and it is revealing of exactly how little resonance the Bear argument had — at least prior to Tuesday. Negative sentiment was looking at as if it was about to be banished to a different part of solar system.
This shows just how rampant the bullish view was:
Top 10 Signs the Market Has Topped
10. I have gained 19 pounds since September 2006, and on Friday, I
sold my personal portfolio of Blue Chips and bought potato chips. (I was at a
Democratic fund-raiser in New York City last week, and I saw Al Gore, but I
didn’t recognize him. I asked my friend, "Who is that skinny guy?")
9. My best friend, Dean the Dream, will no longer open the emails that
contain my daily opening missives on The Edge; they get him too depressed. (The
only person that is responding to my instant messages these days is Fred Hickey,
the
High-Tech Strategist.)
8. To help with my nervous sweating during market hours, I now wrap
myself in Bounty paper towels.
7. I have been called almost daily by Bloomberg TV and CNBC
to represent the bear case. (The segment bookers have explained to me that
there are no bears left to interview.)
6. After lecturing in his graduate school business class at Yale
University in January, even permabear Dr. Robert Shiller told me I am too
bearish on housing.
5. When I request to borrow stocks (to short) from my prime broker,
Bank of America, I have begun to hope the borrow will be denied.
4. I get irate when I listen to the bullish (and seemingly glib) case
for equities made daily in the media. (Worse yet, the bulls are starting to make
sense to me.)
3. I have finally run out of cheap tequila in my bar, which I drink
most evenings on the cold linoleum floor, so in order to reduce my level of
anxiety, I have doubled my daily Zoloft intake.
2. My 14-year-old niece, Natalie, asked me at my birthday party last
Sunday: "Uncle Dougie, why don’t you ever buy stocks; it’s dumb not to,
isn’t it?"
1. Last week I ordered three "Mad Money" Jim Cramer talking bobble
heads from NBC’s Universal Store online, but they couldn’t be sent out as they
have been backordered for three months.
What a difference a week makes. Its not as if the markets can’t rebound, and the old trend won’t reassert itself. Maybe it will, maybe it won’t. But the prior sanguine attitude is unlikely to reassert itself — at least until we see new highs on the major indices.
>
Source:
Top 10 Signs the Market Has Topped
Doug Kass
Street Insight, 2/20/2007 7:52 AM EST
http://www.thestreet.com/_tscs/markets/activetraderupdate/10340686.html
Cryingly funny!
2. My 14-year-old niece, Natalie, asked me at my birthday party last Sunday: “Uncle Dougie, why don’t you ever buy stocks; it’s dumb not to, isn’t it?”
—
That’s got to be c-o-l-d.
The market climbs a wall of worry. The bulls have successfully conjured a big heaping pile of worry with which to climb even higher. Portfolio managers now also have an excuse for poor performance and have innoculated themselves against future performance. “Don’t cry to me, you knew markets can go down. You saw it for yourself.”
Another sign for me is when you see TV programs showing how “easy” it is to make money in property/the stock market.
Rash crystal ballization: Expect 2-3 sucker rallies before tax day, then capitulation.
Thats absolutely priceless… if only we could have all seen it so clearly.
I am glad that the markets are less of any extreme. Less sanguine or less pessimistic are both workable responses to perceived price action in a market. I am sorry to say that I am not as good as I might like at knowing inflection points, knowing what to do at those points and then acting confidently and resolutely at those inflection points. I do try and sometimes get things correct but mostly that is by utilizing rules that perceive as having a tendency to work rather than absolute surety. It is easy to look back in time and recognize times when utter, and complete action in any circumstance would have given us ideal consequences. It is acting in the present that poses the challenge. We all know that the bets with the best outcome are the biggest leveraged bets at those points. The bets that could take you from rusty Yugo to “this is my weekend Ferrari”. We also know that when those bets blow up we could go from rusty Yugo to walking in old Nikes, and we understand that practicing restraint is in order. Certainly there is a fascination with risk taking that allows TV shows like “Deal or No Deal to be popular. Shows which are about how people react under the stress of having to deal with the unknown and their reactions to what might have happened if fate had handed them a different result. They are also boring as hell since a machine could just as well make all the picks on a rule based system and since I do not have a way to get part of the prize or use the information it has no real consequence to me.
There seems to be a fascination with finding that certain stopped clock that was right at what are perceived to be major points of change.
I think we need to examine how we bet and how we react at those times so that we can improve our trading.
Of course all this probably causes Warren Buffet and others of his ilk to loose no sleep at all. It all comes down to whether we want to or choose to perceive the market as a beauty contest in the short term or a scale in the long term. You can make money either way, I am just proposing that we understand ourselves well enough to know which game we are playing.
No matter what there will be markets to make the appropriate bets on.
Be well
Ps. I add the input for the portfolio’s and etfs at the url associated with my name.
This is just like the roaring 1920’s. The stock market crash is just around the corner accompanied by DEFLATION! We’ve had roughly 50 years of deflation and 50 years of inflation in each of the last 3 centuries. With 1 billion unemployed in China and India how can there not be deflation coming?
My debt is gone and my cash is rising!