Not my favorite Bear — but give credit to Bloomberg for the timing of this interview:
David Tice, founder of the $1.2 billion Prudent Bear Fund in St. Thomas, Virgin Islands, discusses the U.S. equity market. The Standard & Poor’s 500 Index may drop below 800 as the economy slows, he said. The benchmark for U.S. stocks fell 2.3 percent today to 1,244.69, sending the index into its first so- called bear market since 2002.
On the market’s decline: "We sometimes we use the word `depression’ because a recession connotes really just an inventory adjustment, etc. What we’re talking about doesn’t have to be as bad as the Great Depression, but it’s a major long-term readjustment of the economy.”
click for video
Sources:
Prudent Bear Founder Tice Says S&P 500 Will Fall Below 800
Michael McKee and Katherine Greene
Bloomberg, July 9 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMmJcRGfAmRo
in dave’s defense, his call for 800 is supposed to happen over a number of years, not next week
Sigh, David Tice is full of crap. He may be right about the S&P but it won’t be because he knows what he is doing.
Take a look at the performance of his BEARX fund since inception [http://finance.yahoo.com/q/bc?s=BEARX&t=my]. I was in this fund from 1996-2002 and finally bailed with a 10% loss. You might make money in this fund if you get in/out at the right points, but don’t just sit in this fund because you can’t depend on him making money even in a significant down markets. Witness this year for example, where to-date, he is down 1.48%.
800 is a retracement of the 2002 pummeling.
Like Louise Yamada, I don’t see anything in the cards to arrest a major move down to ~1050 (I think by the end of the year if 2002 is any guide), but after that the crystal ball is cloudy.
To get an idea of where the S&P is going you’ve got to look at the current components, not just apply blind chartology.
There’s some weakness in the top 50 or so, but the top 4 oil stocks constitute fully 8% of the present index, more than the bottom 200 members.
3am!!!
Barry, Do you ever sleep!?
Bears all over MSM, Roubini gettin’ respect on CNBC. Kudlow and Cramer getting all Bearish….
CONTRARY INDICATORS !!! RALLY CAPS ON !!!
Tice may be right, though. But we’ll return to that thesis later…
Tice has not impressed me with the results he has given to investors in his fund…it is ok to be bearish if you have reasons, but if you are running a mutual fund your number one job is to make money for your investors…Tice has failed miserably at that…I consider him and his web site an interesting place to go to get away from the rah-rah boys, but that is all…
Bruce in Tennessee
I agree with others that he gives bears a bad name.
My wife’s PCRA from her 403b won’t let her invest in individual bonds, cd’s or stocks, so was looking for a decent fund. Since it’s hers, have to be very conservative, if you know what I mean.
Ran across his results. They are crap. I’ve done a lot better than him over the years, and esp. this year when he should have shined. And I’m not supposed to be an expert.
Why don’t they interview an intelligent bear, like Barry?
Intelligent bears, like intelligent bulls arent necessarily looking for the face time.
Agree with the other posters and owned his fund for a bit. Not sure what Tice is selling, but it sure ain’t ALPHA.
According to my sources, Tice’s fund up over 20% in the 12 months (before fees).
First post.
you guys are too hard on tice.
YTD +9.89
2007 +13.42
2006 +9.10
2005 +2.02
Then he got smoked in 2003/04. I for one own the fund (15% weighting)and have been happy with the returns for the last 3 years. I’m gonna stick with this guy for the next 2 years minimum.
Jeff,
You are correct, great 12 months for Tice, and since 1996 his fund has made you…. nothing!
If you want to be a bear use a short ETF. Far more cost effective and will most likely outperform him anyway.
To anyone with an adult memory though, what is going on now, especially with oil, which he also mentions, looks suspiciously like the classic blowoff top that marks the terminal phase of all such multi-year commodity bubbles. This time, like the last time, it is greeted as fresh new evidence of the incipient end of the world.
If you really believe this time is different… you will believe anything.
Let me get this straight…you “invest” in a bear-oriented fund in 1996 and then have the temerity to question the peformance and acumen of Tice?
Hello?! Why were you in a bear fund in 96? Did you expect the Prudent BEAR fund to be positioned bullishly? Accept responsibility for your own less than stellar decision making. The fund does what it is supposed to…profit during bearish periods.
I like Tice for the simple fact that he provides some nice charts and Noland’s weekly credit bubble bulletin/commentary on the site gratis.
Alaskan Pete,
Not sure if you were referring to me or JoJo but I have never owned this fund. The only shorts I have today are DUG and FXP, both ETF’s.
You might want to recognize that a mutual fund investor who keeps a diversified portfolio may always keep say 10-15% in a bear type fund as a hedge so they don’t have to buy and sell funds, this is what the fund “manager” is supposed to be for correct?
You could also do yourself a favor by looking at what the BEARX fund is supposed to do.
Here is a profile for your reading:
The fund seeks capital appreciation primarily through short sales of equity securities when overall market valuations are high and through long positions in equity securities when overall market valuations are low. It may hold more “short” equity positions than “long” equity positions when the dividend yield for the aggregate stock market is low relative to its historic range.
Thus, it still could have made money with appropriate picks in 1996, 97, 98 etc etc. It looks as though picks are based on a judgement of valuation, so over 12 years Tice has not been effective in determining the value of a stock.
And for all this I woulnd’t buy too much into his 800 SPX target and “this time IS different” speech.
It’s not completely ridiculous… A little hyperbolic perhaps but not insane by any stretch of the imagination. 800 S&P…? Sure, why not…? The leverage is most certainly there for the cause…
Okay kids…. Who wants to buy equities….? YEAaaaa…..!
Best regards,
Econolicious
I’ve held his fund since March 07, part of what you are missing is that he is not a “short only” investor. He will hold some long positions as well as a very large position (20-30% of the fund) in gold. From my expiriance, the gold position skews his result and lowers his beta.
Ben-
I’ve only been in his fund for about 6 months or so (was originally going to get in righ at the top in October but couldn’t pull the trigger), so I’ve made out just OK. Not great, but OK. Plan to stay in only as long as I need to in order to ride this out. Will pull it all out slowly but surely once I see enough fear in the market. We’re obviously not there yet, not even close. Why anyone would stay in a Bear Market fund for long stretches of time (e.g. the commenter who was in for 6 years) is beyond me. I’m only in it to hide for a little while. For me, it’s been doing fine, but maybe I’ll also look into shorting an ETF as well.
Jeff,
Glad to hear someone is making some money. 6 months on this fund has been good no doubt, I just personally prefer to use an ETF for something like that b/c the fees are lower and I can get a little bit more specific and do my own homework.
That said, you do bring up an interesting point about fear. I keep asking myself about the lack of bottom in the VIX and wonder if it is because everyone is already short or that mutual funds are getting dumped (as that is what most people own) and you aren’t seeing it just yet.
Hard to say but either way but I think if you talk to the average joe out there he’s scared shitless. What little money he might have saved is going up in smoke, house declining in value, etc. etc.
Still I think it’s yesterday all over again, history is repeating, it’s NOT different this time and I’m saying no SPX 800, I think I’m closer to Troy above but more like 1100 ish.
Favorite long: DUG
Favorite short: FXP
Favorite thing: I can afford my mortgage payment.
@Alaskan Pete – I believe you asked why I was in a bear fund in 1996?
If you remember back to 1996, the market looked very toppy. In Dec of 1996, Greenspan made his “irrational exuberance” speech. 1997 wasn’t a particularly good year in the market either. 1998 through 2001 saw the internet bubble get blown. But through these years, Tice (and others) kept talking the bear case and I was a foolish believer, someone who held to the belief that LOGIC would win out and others would recognize the bubble we were in was unusual and unsustainable. I also believed that Tice and his management knew what they were doing.
Eventually, I came to accept that Tice really had no clue and that logic and common sense has nothing to do with Wall Street. With the cooperation of Wall Street and the government, bubbles can go on for a long time, as many of us have come to subsequently recognize.
Having been in a losing position with this fund through much of my 6 year holding period, like too many others in losing positions (housing anyone?), I kept hoping that Tice would make the big strike and get me positive.
If I remember correctly, I brought into BEARX in Q3 1996 at around $8.70 NAV. There was but one short period of time (early Oct. 1998) when the fund’s NAV had exceeded my buy-in price (and of course, I believed that this was the breakout I was waiting for. WRONG!). Over the 12 year history of BEARX, it has NEVER exceeded it’s original NAV of $10.
When Tice failed to capitalize fully on the NASDAQ crash, as many on their Bear Chat board hoped and expected, I finally took my losses and bailed the fund. Remember, this is when many stocks had huge losses, going from $150-$200/share down to single digits or bankrupt. And yet Bearx Based on the threads on the Bear Chat board at that time, there were many disheartened and disillusioned BEARX holders. Tice only made a couple of $ of NAV in the quarter leading up to 9/11. Since 2004, the fund NAV has fluctuated in a narrow $2 range at the $5-$7 level. That’s for 4.5 years people!
Again, for those in BEARX now, all I can say is that if you happen to have gotten in at the right price point, then remember to get out when you have a profit. Because based on history, it is unlikely that Tice will ever manage to make a real killing over the long term. The S&P could fall 1000 points and I doubt that Tice would be able to return much gain from such an event. It is my opinion that anytime he does manage to make money, it is pure luck.
JoJo,
Very good summary. I thought maybe you were in there for different reasons (as part of an overall mutual fund portfolio that you just hold) but it doesn’t matter. i said the same thing above, he’s made no money over the 12 years in the fund and the fund DOES in fact have long positions, and like I said above, clearly he can’t value correctly on the long or short side. I mean, just look at his peer group performance in the fund when the market has been down, he’s around 80th percentile when comparing with other like funds.
I think it is sort of funny all the people on this site who would ridicule someone like yourself for being in a fund like this.
They are no doubt the same people that just happened to pull thier portfolio out of the market last October only to put it all back in Jan of this year and moved it right back out in Mid May. I’m sure if we get a short term rally here all of them will have picked the exact top and bottom, just like they will all have been short oil right after it hits it’s peak.
Doug Noland rules the free world of credit market analysis as we know it today. Nuff said.