It's tough to be a bear these days.
At the beginning of the year, those seeing the glass as at least half-empty were expecting Europe to drag the economies of the world into recession, China's economic growth to tank, the unrest in the Middle East to become a huge problem, the Fed to make a mistake, earnings to soften, and the politicians in Washington to send the U.S. into a depression. In short, the bears were calling for the sky to fall and for the U.S. stock market to crash and burn.
The only problem with this thesis has been that Europe's economy is actually recovering, China's GDP continues to grow at around 7. 5 percent , the situation in Syria blew over quickly, Fed policy continues to be uber-friendly, corporate earnings for the S&P 500 are at record levels, and try as they might, the politicians haven't managed to blow up the Republic just yet.
Oh and for those keeping score at home, the S&P 500 is up 21.5 percent year-to-date and finished Friday at a fresh all-time high. So, the question to the bears is how is that negative macro view working out so far?
Bears Say Stocks Are Overvalued!
Despite being dead wrong on Europe, China, the U.S. economy, earnings, and the how the market would perform in 2013, the bear camp remains largely undeterred. Instead of admitting defeat, the current battle cry is that stocks are overvalued and as such, will soon succumb to an episode of mean reversion akin to what was seen in 2000-02.
As Exhibit A in the argument, the negative Nancy's of the world point to the long-term chart of the S&P 500. The argument is that with prices as high as they currently are, the only direction they can head from here is down.
