Seeking Alpha

The "fully invested bear"

  • The S&P 500 is probably 10% to 15% overvalued says BMO private bank CIO Jack Albin, but he's keeping stock exposure high in most client portfolios. It's not all about valuation, he believes - you can't ignore monetary policy and momentum. He'll consider cutting exposure to stocks if they fall 6-7% in a month. "At some point we are going to say, enough is enough, and we are just going to go to cash."
  • The "fully invested bear" phenomenon - where pros feel they have no choice but to own stocks - is cropping up more and more often of late.
  • "At the present time, I'm not feeling overly concerned," says Waddell & Reed CEO Henry Herrmann. "More money will come into the stock market ... there is no alternative. Bonds simply don't get you there."
  • S&P 500 ETFs: SPY, IVE, SH, SSO, SDS, IVV, SPXU, UPRO, VOO, RSP, RWL, EPS, IVW, SPYG, RPG, SPYV, BXUB, RPV, VOOG, TRND, VOOV, SFLA, BXUC, FTA, BXDB
Comments (9)
  • "fully invested bear" phenomenon" - a way for strategist to hold onto his job by keeping clients in the market but if the market falls they can
    say "See I told you so"
    23 Dec 2013, 08:17 AM Reply Like
  • “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing” - chuck prince
    23 Dec 2013, 08:21 AM Reply Like
  • I'm not sure the approach of being heavily invested and then bailing if stocks go down 6-7% in a month is fully thought out. It sounds like buy high sell low to me. Then again, I'm not a financial advisor.
    23 Dec 2013, 08:32 AM Reply Like
  • Tom, you're right, and you don't WANT to be a financial adviser, which is little more than a fancy word for equities salesman, as in, I'll first charge you an annual fee, then talk to you for an hour using impressive market-speak, take your money, skim off my commissions, and hope your positions fare well, because I won't take the time to look at them again -- I'm too busy finding other suckers. And the poorly informed investors who simply shovel money their way are just waiting in line to be shorn like sheep.
    23 Dec 2013, 11:44 AM Reply Like
  • And if everybody else takes a 6-7% decline as a sell signal, and many will, there will be no buyers, only margin calls as prices fall to find buyers. People won't be able to get out all at the same time.
    26 Dec 2013, 05:16 PM Reply Like
  • Interbank lending rates in China are spiking, China is no longer buying US treasuries, the FED is reducing its purchases of US Treasuries, Banks have mostly met the Tier 1 required Capital ratio's and are flush with Treasuries, who is going to step in and buy 60 Bil a month in US government Debt? The Consumer? I doubt it, no one in their right mind trusts the government at this point in time, or is willing to lock in 2.9% for a decade. When rates spike, we will see a wash out in equities and the coming crash won't be pretty. The algoritham's will all sell at once, and if it were to happy in the next week or two, their won't be any volume to support. Volume has been steadily decreases, so any bear raid will have little buying to support a sell off.
    23 Dec 2013, 09:27 AM Reply Like
  • Who's left to buy if everyone is all in? And when markets begin to falter, I suspect the money managers limit will be more like 4-5% than the 6-7% they're sharing with the competition cause when the time comes, it will come down to speed and who can get out the fastest.
    23 Dec 2013, 11:12 AM Reply Like
  • Looking forward to watching the January effect. Not an entirely accurate indicator, but was dead-on for 2013. Reference: Stock Trader's Almanac. Shoulda went all-in at the start of '13.
    2014 is a different matter. Taper has begun and we have a new fed chair...person. Those going all in at this point with dreams of DOW 36,000 are taking a risk. (that's only a double and some away)
    The stock market seems to be like that roller coaster that ratchets up real slow like til you get to the top and then.... wooooooosh! Look out below...
    23 Dec 2013, 02:14 PM Reply Like
  • Doctorspec

     

    Finding a chair for your clients when the music stops is a pipe dream. With a falling elevator, you can plan on cutting exposure at a 6 to 7 percent loss and wind up selling near the lobby. I am not reassured much by such a plan.
    23 Dec 2013, 09:49 PM Reply Like
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