Morgan Stanley sent this 'Bizarro World' note to investors that asks, 'Are we on a cube-shaped planet?'

Morgan Stanley analyst Adam Parker and his team just sent the strangest note to investors. Its title is, “Bizarro World and The Bull Case Is No One Has a Bull Case.”

It gets weirder from there.

“Are we on a cube-shaped planet?” the note begins. “Should ‘Us do opposite of all Earthly things?’ Everything seems backwards. Sell winners, buy losers, own staples in both up and down markets. Just do the opposite of what makes sense. Bizzaro World.”

The point they are trying to make is that stocks are doing the opposite of what their companies’ results indicate they should be doing. “Companies with good results are being hammered. Companies with bad results have stopped going down, with freight, WMT, and other prior losers outperforming. Bizarro World.”

That makes giving investment advice extremely difficult, the Morgan Stanley team says:

Martin Marietta [a supplier of heavy construction materials] reported last week, and they and a couple of other materials companies have blamed their poor quarters on the rain. Even Milli Vanilli’s success with this line turned out to be fake. The rain? Oh, the stock went up a lot that day. Bizarro World.

In fact, if you do the normal thing and bet on companies that are strong, and sell those that are weak, you can lose a lot of money. “Our portfolio advice has been pretty horrendous lately,” the team admits:

For those who follow our portfolio, we did quite well over the five years from 2011-2015. But, our portfolio just had its worst month in 61 months in January, and things have not improved in February. The market is down more than we thought it would be. Our biggest sector bet has been financials (particularly credit cards). As an investor recently said to us at a conference, “I am doing a lot of things, just nothing with confidence”. Doing the opposite of what we recommended would have been better. Bizarro World. Or at least hopefully not the real world.

The phrase “Bizarro World” refers to a series of Superman comics about an alternative, cube-shaped Earth where everything is backwards from the real Earth:

These are the rules on Bizarro World:

The Morgan Stanley note does move on to a more normal discussion of investor sentiment and US equities, and it makes some specific recommendations, such as getting out of energy stocks completely, going overweight in financials, and increasing its stake in Apple (AAPL).

But, they say, it’s tough to see the positives for the negatives. “What’s the bull case? The positives are this: no one is articulating a bull case for US equities with conviction … So maybe, the bull case is just that no one can articulate a bull case.”

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