“Dude, you really love a good bloodbath, don’t you? You actually have fum when the market is getting killed.“
Prior to the collapse, there were few bigger bears than I. Kevin (my partner) constantly harangued me about it. That’s his quote above, and I admit to some level of guilt.
Understand why this was: The long hours of research put into identifying the variant perspective was a lonely path. There were no guarantees it would be correct. Worse still, it took a long time — years — to pay off professionally. I ate a lot of crow, and was mercilessly tortured by eejits over what I knew was a giant debacle in the making.
When the deluge came, I incorporated the collapse into my thinking. It changed the valuation calculus, the surprise factor, the psychology. I didn’t want to be one of those guys – the über bears who stayed negative regardless. This unfortunate crew missed the 1982 lows, the 1980s bull market, the tech boom, the 2003 post-dotcom-implosion rally, the commodity boom, the 2009 snapback.
After the flood, I started looking for the silver lining. We already had a massive crisis and collapse, so the worst of what came before was already reflected in equity prices and trader psychology.
Even after all this, these reflexive Bears refuse to flip. They will not admit the economy is getting better, albeit slowly. They insist the recession was a depression; they insist it never ended. These are the bears who cannot be killed. They will stay bearish, regardless of the data that all but insists otherwise.
These are the Zombie Bears . . . they cannot be killed.
As I write this, the market is off 1.5%, and some of our long positions will soon hit our sell discipline (We will stop ourselves out). This is the nature of asset management: One needs to be flexible, intellectually nimble, open minded. One cannot marry a position, ignore data that goers against it, and just hope for the best.
Markets on occasion appear irrational. They operate on different time scales than humans do. We are stuck in the moment, they exist across longer arcs of time. So very often, we cannot adapt to their ways. We fight them . . . and we lose.
Meanwhile GDP was revised to 2.5% (more than previously calculated) on increased exports boosted domestic spending.
Bad news, bears The Recession is over . . .
Photo: Barry Ritholtz
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