Three Bears Weigh In

by: Barry Ritholtz

With so much green on the screen these days, you would think its tough finding any bears. Justin Lahart in yesterday's WSJ (sub. req.) did us that favor, focusing on Merrill Lynch's Richard Bernstein, J.P. Morgan Chase's Douglas Cliggott and Morgan Stanley's Byron Wien -- 3 well known Bears noteworthy for correctly calling 2000 -- and spoke with them about the current environment:

"In 2000 when stocks hit new peaks almost daily, Merrill Lynch & Co.'s Richard Bernstein, J.P. Morgan Chase & Co.'s Douglas Cliggott and Morgan Stanley's Byron Wien -- all investment strategists -- had figured they were watching a worsening speculative bubble. Mr. Bernstein had become bearish on stocks in June 1998. Mr. Cliggott and Mr. Wien, who have since left their firms and become hedge-fund investment officers, had become negative in February 1999.

They took a lot of flak from peers for their then-contrarian views, but the three bears got it right, which makes their views worth hearing out now. That is especially because these aren't permabears, people who call for the sky to fall every year and get it right every 10 years or so. These three have had their bullish moments. Mr. Bernstein for a time in the mid-1990s was telling clients they should be 100% invested in stocks.

Now all three have their doubts about the upside in stocks."

We are at a cyclical peak in earnings, mid double digit year over year for the SPX. This comes after for 13 consecutive Qs of strong profits.

All 3 bears -- Wien, Cliggott and Bernstein -- believe profits are at risk in the quarter to come, and that could weigh on share-price gains and possibly push the major stock indexes lower.

Interesting article worth clipping. Reread it a year from now for laughs.