Buckle up this is going to be a long rant...
Back in 1999 when the Dow hit 10K, there was a party-like atmosphere on the NYSE as floor traders celebrated. Many sported "Dow 10,000" hats. Of course about 1 year later the market made a major bull market peak after the tech bubble popped. This time around I see very little in the way of celebrations. Instead, I see plenty of cynicism, doubt and even more anger and denial from the stubborn wrong way perma bear novices I track who have still been getting their asses handed to them with their puts and bear etfs.
BNN has a segment called squeeze play whereby the anchors discuss the day's events/news and when discussing DOW 10K you could see the smug disbelief in their faces and in the sound of thier voices almost like resentment...very similar to how someone reacts when they encounter a door to door salesman. "we aren't out the woods by any means" was one comment that stuck in my mind and there was a discussion about how the improved bank earnings we've seen from the big US players were likely a 1 time phenomenon due to pent up demand.
Later on when watching the news, I heard the anchor say "in these tough economic times". When I heard her say this it simply reinforced my LT bullish outlook. The stock markets around the world are soaring making new 52 week highs and yet main street media still says "tough economic times". This is such a powerful contrarian indicator. I've said this before...main street media are always late to the party when it comes to recognizing what the stock market recognizes and the fact that people are still calling this "tough economic times" while the stark market is yelling and screaming that tough times are going to be over tells me we are still early in this bull market. Who are you going to believe main street media or the market? Yes, we've seen a massive rally but it's likely got a lot further to go.
If there's one thing I've learned over the years is this: markets will go up or down a lot further than you think possible so when in doubt stick with the trend in place. Coming into 2008 it was unthinkable, even to the bears, that we would get the collapse that we saw. I noticed most bears covered shorts at around SPX 1000 and yet markets still tanked another 35% from there.
Never in my life have I seen a rally so hated and so despised yet there's bears out there who think there's so much optimism right now...bears like Doug Kass who just like I predicted would be proven wrong in calling for the top of the year back when the SPX was at 1030. He says optimism is high right now. I strongly disagree except for perhaps some measures of ST trader sentiment...but Kass is not referring to that...he's talking about the longer term. For every optimist you find out there I'll show you 2 pessimists at least. Joe six-pack investor has been cashing out of equity mutual funds since May while pouring into bond funds. Bears like Roubini, Schiff, and Whitney are still being given the spotlight (although not as much as before). AAII sentiment show bears outnumbering bulls on a frequent basis all throughout this historical rally since March. I don't get to watch CNBC anymore but I understand guys like Kudlow have been giddy. You can't read much into that because there's always going to be permabulls and permabears....what you should be looking at from a sentiment point of view is what the average person thinks of these people and let me tell you, there's nothing but contempt for guys like Cramer, Kudlow and other bulls while guys like Roubini, Schiff and Whitney are still held in high regard. I'm sure the permabulls have some supporters, but on the message boards and blogs there's nothing but ridicule towards these guys.
I won't mention the name of this bearishly biased blog, but I discovered today that the blog will be included as a part of seekingalpha.com's lineup. No offense to this blog writer...he seems like a nice guy, but he's been nothing but wrong for months on end about where the markets were headed and got his ass kicked badly with his puts and his position in SRS which he bought in spring (to his credit, he did buy some gold and silver when gold was at about $950 or so). He as well as others has been in complete denial about this rally and people would have lost their ass if they followed him and yet seekingalpha.com is willing to include his material??? What does this tell you? It tells you people are still seeking information to confirm their wrong-way beliefs and an excuse to stick with their losing positions.
I'll be the first here to admit that I get it wrong at times and I've done so. I'm not afraid to do so. It just amazes me however that most of these bearish guys I pick on never have once said "boy did I ever get this wrong". Instead, they get angrier and bolder in their convictions while wringing their fist claiming another crash is just around the corner. How these guys have any credibility at all is beyond belief. Even pros like John Hussman and John Mauldin whom I read regularly, have refused to give a mea culpa for being so wrong about this market. Doug Kass might be in the same boat if he doesn't fess up soon. These guys all use the "it hasn't happened yet" excuse with respect to their botched calls. Why don't they capitulate? It's all about ego. The above guys are all really intelligent guys and they have large followings. Like I've said before, the sooner you keep your ego out of this, the better you will be at this game. I don't care if you are Jesus H. Christ, you are going to get it wrong at times and you will get hurt big-time by staying wrong if your ego gets in the way. You are NOT God even if you have been making money hand over fist for a long stretch of time. Also regarding the above “pros”, not once have I heard any of them say a thing about the steeply sloped yield curve which as far as I can tell, has forecasted good economic conditions correctly every time. The yield curve is such a basic yet accurate predictor of the economy and yet these pros and so many others don’t ever mention it.
The chronic cynicism/anger/skepticism I see out there is not only by market participants but from people in general and it's depressing. I suppose it's understandable to a degree given that in this decade alone we've seen 2 big bear markets riddled with scandal and greed. Boy I miss the 1990's....I know the late 90's were "bubble years" but man did they feel good. Maybe it was because I was in my youth, but I just got the general sense of "feel good" optimism in the air around me. Then ever since the dot com collapse things never did get back to that type of optimism even after the recovery in 2003. Then of course we saw the collapse last year and sentiment got pitch black. There was a feeling of hopelessness and dread mixed with anger and cynicism. Although the hopelessness and dread are abating the anger and cynicism remain strong. I'm hopeful however, that time will heal these wounds. I'm hopeful that the green movement we are seeing will gather steam and that we will continue to address things such as obesity and other symptoms of excess and moral decay that have threatened civilization as we know it.
I'm hopeful that the crisis we went through will be a wake up call for people to be more responsible with their finances and for regulators to take the actions necessary to prevent it from happening again (at least for several decades to come).
And I'm hopeful that my future children will not be born in a world of misery and hopelessness. I'm glad we have a world leader like Obama at the helm to help us get through this. Although his policies are debatable, I believe he has heart. I get the impression he truly cares about the people and wants the world to be a better place for all. Just my honest opinion......
I'll be back with the usual commentary tomorrow morning.
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