Gluskin Sheff’s David Rosenberg has long been dubbed a perma-bear.But in the face of stock market resilience, he has been attacked for being too bearish.
Rosenberg has previously admitted that he was wrong when he declared that the ‘equity cult’ was dead.
And in today’s Breakfast with Dave report he had to defend himself again, after receiving an email that accused him of being too bearish, of potentially missing out on one of the best market rallies, and, that asked if he was finally willing to change his positions.
Here is the email and Rosenberg’s response:
You and I have been exchanging e-mails since April 6, of 2010, the S&P 500 was 1,189.44, approximately 21.5% higher than when it was back then. You were and continue to be extremely bearish, and I was bullish. Then in 2011, you e-mailed me that you thought we were going to go to 850 or 25% lower on the S&P in 2012, and heading into another recession? You also made comments earlier this year that we were in a DEPRESSION (which I thought at the time, was the most ridiculous call on the year and decade).
So my question is (and I do give you a lot of credit for still sticking by your wrong prediction) when are you going to throw in the towel, and admit that you have been absolutely, indefinitely wrong about you predictions over the past three years, because I will tell you what is going to happen next, before it probably happens….
The S&P will probably break this recent 1,474 level, and test new highs, and you’ll still be bearish all the way up, and sooner or later the market will correct, like it always does that 15% to 20% or so, and you will indeed finally be correct, but you would have missed, one of the best market rallies we have seen in decades…
So I guess my main two questions are, at what level in the S&P are you throwing in the towel, and do you still stick to your opinion, that the United States is still in a DEPRESSION … thanks for the time …
All legitimate questions. But let’s be fair. I clearly haven’t been bullish enough on the equity market, and that is for sure. But we have been recommending for some time now that investors be positioned in parts of the capital structure that provide for a relatively secure cash-flow stream – bonds, spread product, gold and specific income-generating segments of the market like REITs and dividend growth/yield themes. This individual is quite right about the equity market as an entire asset class, but it is not the only avenue for investors to seek out returns.
I never told anyone to hide under the table and move into cash. Quite the contrary. As for the call on the economy, come on. This goes down as the weakest recovery ever and employment is still some five million shy of where it was pre-recession. We are seeing more people enroll in the federal food stamp program monthly than new job creation. And if Bernanke didn’t have the same view as me (he was late), the Fed never would have embarked on open ended QE, after already tripling the size of its balance sheet in the past three years.
I suppose one would have concluded that the Depression ended in 1935 because GDP bottomed in 1933 and the markets in 1932, but it actually went on for another six years. As was the case then, a focus on preserving capital and preserving cash flows worked very well over the entire period. Cash was not king, but cash flow sure was. And that remains our primary – not exclusively but primary – focus for generating high-single-digit risk adjusted returns.
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