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January 21, 2008
Did Bears Cause the Sell-Off?
I've confessed here many times -- and on TV -- that I generally have an economically sunny disposition, and that I definitely tilt to a more bullish than bearish view. But that said, I have real trouble with the Ben Stein/Don Luskin/other view that says bears caused the current market downturn by scaring average investors.
Here is an example from Mssr Luskin's latest:
ARE YOU SATISFIED, all you permabears who have been preaching financial Armageddon — for years? Your patience in the face of reality has finally paid off. You've talked the American public into outright panic, and so now we've got the first real stock market break since the present bull market began in early 2003.
Cmon, be serious. Because while I'm assuming that's mostly rhetoric, it is still bullshit. Bears didn't cause the current market downturn. To the extent that you can tie it to a narrow list of things, it was caused by growing uncertainty about the likelihood of a consumer-led U.S. recession -- on the back of major credit market problems, etc. No-one scared investors into selling while the economy was ticking along, and to suggest as much, is, or at least should be, offensive to intelligent investors everywhere.
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Oh my, it seems that all the conspiracy theorists got a hold of enough capital to make their conspiracies come true.
Next up: Roswell believers use giant magnet to pull UFOs in from deep space.
(sorry, I can't help myself)
I guess the permabears Won Ben Stein's Money.
Aren't bears or bulls "causing" up/downturns kind of like weather forecasters causing certain weather? In each case, whatever general trend you predict(hot/cold, wet/dry, up/down), you will be right eventually, because (as Herbert Spencer so thoroughly details it), everything must either evolve or dissolve, grow or shrink, organize or descend into chaos, etc., until reaching the point at which it reverses itself. In other words, be cyclical (or more specifically, oscillating, in my view). Give me dates for your predicted trends and show me a pattern of consistently correct predictions, and I might start paying attention to what they say - but even then, I'll probably just attribute it to dumb luck before I give them credit for it.
Don't make fun of Luskin -- just because his fund lost 75% of its value in the 2000 crash is no reason to think he is the dumbest man on earth.
Looks like Luskin's suffering from a severe case of anal/cranial inversion.
Who cares who caused a bear market or a bull market? Get past being "right" and make money. What rule says you always have to buy anyway?
Bear markets are short and savage. Bulls can be right for 5 years in a row, but when they're wrong.....look out below
Hearing people like Luskin and Stein brings new meaning to the word "bullshit".
It's truly Shit from Bulls.
;-)
Another problem with the "Bears caused the selloff" claims by Ben Stein and Don Luskin is that since the bears have been saying their bearish musings "for years," why is it only now that the people listen?
These perma-bulls have an agenda and the idea they they need to pass blame and not accept volatile markets is irrational.
Any real trader knows that bears cause rallies, not sell-offs. "Markets climb a wall of worry," etc. It is when there is a lack of bears to capitulate into a rally that momentum fades.