Perpetually bearish market analysts - better known as "permabears" - have a pretty easy job ordinarily.
After all, the mainstream media does their legwork for them, reporting wars, terrorist acts, violent crimes, corruption, political scandals, government deficits, corporate bankruptcies, and other unsavory developments 24 hours a day, seven days a week.
This leads the average person to believe that we live in a terrible country in an awful world during a horrible time.
Never mind that Americans today are living longer, healthier, safer, richer, freer lives than any people in the history of the planet. The majority of us tell pollsters that the country is on the wrong track, our best days are behind us, and our children face a diminished future.
Permabears love to take this misperception and throw kerosene on it. They insist that things are actually much worse than you imagine and everything you've worked and saved for your whole life is about to vanish, thanks to the coming - pick one - economic collapse, currency crash, market meltdown, political crisis, fiscal cliff, cyber attack, population explosion, mineral shortage, or Ebola outbreak.
My problem is that I've been around too long. I've heard these same "analysts" recite this litany - for not just years but decades.
How do they get away with it?
A) People have short memories.
B) Even a stopped clock is right twice a day.
Recognize that every bull market is followed by a bear market.
When it finally shows up, as it always does eventually, the permabears switch into second gear, claiming that this is exactly what they've been warning about.
Did you not heed their advice? Or were you one of the poor chumps, pigeons, and marks who were foolish enough to cast their hard-earned capital into the stock market?
As long as stocks keep going down, this has the ring of truth about it. And, it keeps sounding good as long as share prices head south.
However, history shows that stocks never, ever decline enough for permabears to pronounce a buy point. When times are good, stocks are too expensive. When stocks are cheap, the outlook is atrocious.
If you are waiting for a permabear to tell you that stocks are finally attractive enough to buy, you will wait a long time indeed.
They just keep pouring the kerosene in good times and bad.
Of course, just as a bear market follows every bull market, a bull market follows every bear market. (The history of the stock market is one of progressively higher highs and higher lows.)
When the next bull market begins, permabears will pronounce it a "sucker's rally" or a "dead cat bounce." As it gathers strength, they will insist the risks are getting only greater, that the second leg down will be the one that really flattens the unwary.
When the rally persists, for not just months, but years, they will explain that they weren't wrong, "just early."
Some of these guys have been early for three decades or more. They are nothing if not punctual.
Of course, their warnings sound reasonable to the next group of listeners who weren't around for the old pronouncements of doom and to those who bought into their philosophy so heavily that, like the permabears themselves, they can't admit they're wrong.
But times are tough for these guys today. After all, the stock market bottomed more than eight years ago and shows no sign of topping anytime soon.
Inflation is down. Interest rates are low. Energy is cheap. The dollar is firm. Hiring is up. Wages are rising. Corporate profits are strong. And, the S&P 500 keeps hitting new all-time highs.
Their message is growing thin. Eight-plus years is a long time to be dead wrong.
But, unlike our other ursine friends, permabears don't hibernate. They never change their tune. That's because they know only one: taps.
Someday, they'll be right again, of course. (That's why we asset allocate, diversify broadly, and run trailing stops behind all our positions.)
When that day comes, they will rise in a chorus to remind us how they told us so.
And, indeed, they have... for more than 30 years now.
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