Hostility Towards the Bear View
I have been blogging since late summer 2006. Since then, I’ve spoken my mind, shared my thoughts and beliefs, and tried to clearly discriminate between facts and opinions. And I’ve presented much of both. I have, as long-time readers know, pretty blunt views on Fed policy, investors’ behaviors and the motives of market actors. I feel like I was pretty on top of the pending train wreck, having written about both complacent volatility markets and the likely severity of the subprime fallout. I even talked about what I perceived to be a false market rebound, a bounce in the face of inexorable eroding market conditions. Further, I’ve also stated quite clearly that I expect this downturn to last not months but a few years, placing me somewhere between Wall Street consensus and the sky-is-falling perma-bears. But even with my track record, transparency and complete lack of any self-interest whatsoever, I continue to take shots from whose who see me as way, way too bearish, and their barbs make it seems as if I am almost unpatriotic. Barry Ritholtz recently wrote about this phenomenon, where financial bloggers, in general, have been chided for being way too bearish. Yeah, right.
Consider this: earlier this week I wrote a post titled Just an FYI… 8 Mega Themes for the Future. There are the eight themes mentioned in the post:
1. The economy sucks now, and will continue to do so well into 2009 and perhaps beyond.
2. The real estate bust is a major reason for our despair.
3. Fears across the financial sector will make things worse, thereby fueling more fear and making things worse, and on and on.
4. Municipalities will be hurting, placing tremendous
financial strains on states and the Federal government just as tax
revenues are declining.5. Computer security will continue to be a pressing issue.
6. Previously closed systems will become increasingly open.
7. Seemingly recession-proof sectors prove not to be recession-proof.
8. Emerging markets will continue to progress, driving convergence with the developed markets.
This post was subsequently republished on Seeking Alpha. The comment thread is here. One comment in particular highlights what I am talking about. From commenter “Tony Saprano”:
I love your article because it makes me so VERY BULLISH! Here is why:
even before your 8 market trends you list all of those negative links.
HARDLY ONE WAS POSITIVE. The Russians are coming. The Russian are
coming. The Russians are coming. Do you remember this phrase? I guess
not. The fear was that they were going to invade America by crossing
over Siberia and invade Alaska and come down through Canada. lol.#1
You
say the economy will suck well into 2009 - 2009 is only ten months out.
You say we have deeply embedded problems - Americans loves a difficult
challenge the more difficult the better. You say that these problems
will affect the world over - this contradicts your 8th trend - you
cannot have it both ways.#2
You say that real estate is
a mayor reason for our despair - I like to hear words like “despair” -
to me it means the bottom is within sight. You say that there is a
ripple effect on Wall and Main street - duh I wonder how many times
have heard this but keep it up - its bullish.
Will buyers from foreign lands come in as an investment and currency play? See the Reuters story at the end.#3
I
love this one. Fear fueling more fear. Whoa!!! Will I be able to look
up into the sky and see dark clouds of locusts eating everything in
site? The Dow better drop 2,000 pts on Monday.#4
Another
great word - tremendous. Tremendous financial strain on our states. I
guess Warren Buffet made a mistake by getting into the muni business.
Poor Warren or should it be more poor teachers pay? Warren will get
richer and the teachers will get poorer. I can’t believe I said that.
Anyway you should love your profession more than you love your salary.
lol.#5
This is just plain lame. I’m more concerned about terrorist than this one. But I guess we’ll have to hire more FBI agents.
#6
From
the macro to the micro. The internet is the internet and that’s it.
Let’s not make too much out of it. Just sit back and watch Google,
Apple, News Corp and Microsoft battle it out while your home is
foreclosing. lol.#7
They overbuilt. Its that simple. But
aren’t there other recession proof sectors that are still hiring. Even
with the last unemployment report? I wonder which one it was?#8
I’m
bearish here and this is why. Inflation will eat (no pun intended)
these countries alive. They now have a appetite for meat the pundits
say. They want cars. They want homes. They have water and pollution
issues. Gee what else can I say? 2 or 3 billion people will be eating
T-bone steaks. It ain’t going to happen. However, health care is an
issue in the emerging markets and you have to address this issue before
the t-bones. I guess this is why Warren has been loading up on JNJ, GSK
and SNY.
Do you detect just a hint of sarcasm and hostility here? This kind of comment is not unique, and symbolizes to me the difference between being locked in a short-term historical mind-set and seeing what is really happening through a clear set of glasses. This is what Taleb writes about all the time. It is hard, even painful and highly dissonant, to consider possibilities outside of one’s own experience. For the past 25 years, with some burps here and there, this generation has seen the market go up. Yes, NASDAQ got hurt, but the Dow and S&P 500 hit new highs, credit was abundant, deal activity was robust and real estate prices skyrocketed. It has generally been party time for smart investors.
But what we are seeing ripple through the system now is different than what we’ve experienced in the past 25 years. Financial markets are far more intertwined. The credit bubble has caused homeowners to over-leverage and overextend, setting themselves up for a brutal fall. And this is what we’re seeing today. It isn’t unpatriotic or merely negative to state these things. They are what they are. But for the collective mind-set to begin approximating economic reality, people will need to push themselves to imagine a future that is very, very different than the recent past. If not, it will all come as a big surprise when the depths of the problems persist well beyond most people’s expectations. And the pain and suffering will hurt all the more.
