'Take Your Money And Run'

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by: Bill Kort

This is a paraphrase of the prime message from an interview with perma-bear, David Tice, on CNBC's Trading Nation Thursday, April 12.

Now, this is not a new message from Mr. Tice. It has been his message for most of the past three decades. According to one wag, Tice has called at least thirty of the last 2 major bear markets (you know… the stopped clock is at least right two times a day). I personally know this to be pretty accurate, as Mr. Tice's mother was a long-time retail client of mine. We both used to shake our heads in disbelief at the persistent negativity on the market articulated by her son.

This negativity evidently resonated with many investors. When he sold the Prudent Bear Fund to Fidelity back in July 2008 (near the top if you were a bear) it had assets in excess of $1.1 billion. He held these assets over time even though his clients really did not do that well (an understatement) vs. the market. Business Insider published an article back in August 2014, "David Tice: Stocks Will Fall 30% - 60%." In the article, they point out the 10-year track record of the fund going back to 2004.

One would think being negatively positioned going into the 2008 meltdown that Tice and his investors would have cleaned up. They did not. In fact, over the 10-year period between August 2004, and August 2014, $10,000 invested in the Prudent Bear Fund would have become worth $5,340. That same $10,000 invested in the S&P 500 over the period would be worth $22,244. To carry this thought a bit further, that $22,244 would be worth $33,810 today (before dividends) if left in the S&P. Meanwhile, except for a few brief forays into the light (back-handed optimism - being leery of a market melt-up.), Tice would have advised extreme caution … totally bearish positioning (gold). Back in 2014 Tice was forecasting the price of gold to be at $3000/OZ" in the not-too-distant future." It is virtually unchanged from that time, closing recently at $1347.90, and there have been no, nor will there ever be, dividends.

Pray tell, why are we seeing Mr. Tice all over CNBC?

His advice has been absolutely useless. He is not credible except for the fact that he made a bundle of money for himself when he sold his fund to Fidelity. It has nothing to do with a superior market call or stock picking record (making his clients rich). It all goes back to CNBC and the Mankind's propensity to run to bad news. "I've seen the enemy and they are Us."

The media knows that guys like Tice help build audience share, especially when combined with a fearful, volatile market and a scary political/geopolitical news backdrop. This Is CNBC Nirvana. They don't care if Tice is a credible witness. They love him because he says scary stuff that helps increase the fear which in turn increases viewer engagement. CNBC is Shameless!

Anything new in the picture?

I haven't posted much for a few weeks because not much has changed. IMHO, the bull market has further to go based on the following:

  • Business is good, both here and abroad … a synchronized worldwide economic recovery.
  • Earnings should continue to improve based on tax cuts.
  • Earnings will also be impacted by tax cut related, more money in consumer's pocket and tax cut derived deficits.
  • Deficit spending equals more stimulus
  • Rates are going higher off an unbelievably low base. There appears to be no rush on the part of the Fed.
  • Trump will continue to tweet and deflect adding to uncertainty and volatility… Get used to it!
  • I believe this secular bull has further to go. In its entire 9 yr. run there is still persistent disbelief, fear and no euphoria.
  • Eventually this secular bull market will end badly in fearless, rosy optimism and gross speculation. They always do.
  • We are not there yet.

So, 'Take your money and run' was just an attempt on my part to take a page from the media playbook on getting your attention with a negative header. It has been my goal with kortsessions.com to separate the wheat from the chaff as it pertains to the media's sensationalism and negativity. How are we doing? As always your comments and criticisms are welcomed.