BULL VERSUS BEAR
26 October 2009 by TPC
6 Comments
Marc Faber is terribly bearish over the long-term and even sees the dollar falling to ZERO. Meanwhile, Lakshman Achuthan, managing director at the Economic Cycle Research Institute, believes this recovery is no different from any other:
Bull -
Bear -
Would anyone bet their money on Achuthan over Faber? I think you’d have to be a crazy man to do such a thing.
I am betting on neither… short term bearish on stocks (I think we have met resistance on earnings season)… I cannot be medium term bearish because almost everyone is long-term bearish. Markets have a way of making the doubting Thomas’ into believers.
How many people are positioned for a near-term correction? And are people bearish or bullish on the market (not the economy… you cannot be a contrarian on the economy, and the “inflation deflation” debate is a waste of my time now as it seems the risk/reward for deflation trades are lower.) If there is a correction, it would not be a crash, and the correction will lure people into being bearish, which will allow for a retest of the current highs along with more bullish sentiment, which would set-up for 20-30% decline (think Janaury-March 2009).
I doubt it would play out that way though…
I’ll probably get bullish on treasuries (for a deflation trade) if there is another 10 bp rise in yields.
Also bullish on dollar vs. euro.
It seems that the Bull vs. Bear thing is not all that it’s cracked up to be. Faber is talking longer-term and Achuthan is talking short-term.
I’ve also heard ECRI/Achuthan elsewhere saying they think we’ll have more frequent recessions in the years ahead than we’ve seen over last few decades.
FDO15 Reply:
October 26th, 2009 at 6:29 PM
Of course Acuthan claims his call is long-term. That way, if the market collapses in the near-term he can still claim to be correct – which is exactly what they did in 2008 when the market started to collapse when they were bullish.
From Jeremy Grantham:
https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51IIAs8wlv%2fbfj2bAT26VsvYpj0t45CR%2fKxQWVagaapO70xfyZbVwVmniAtcAJjwP3NY5SmmK8pifrmylR1wQJCqCMrezy4Ju%2bXS0%3d
The FED is going to stop quantitative easing soon, so they are probably going to get in as many shorts as possible before creating another rally. I am already seeing people becoming very bearish short term. Then again, I suppose they have to be right once?
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