This fucking moron is a paid Forbes shill. He is the ultimate contrarian indicator. Please read his rant carefully. Also note how he pats himself on the back for his brilliant market calls. Whenever I come across a bloviator like this moron, I go back to see what they were saying in 2007 and 2008. That is what separates the men from the knuckleheaded optimistic spewing shills. I’ve included a few choice words of wisdom from this douchebag after his rant.
Insane Bulls And Bears
Evidently a believer in Rahm Emanuel’s dictum that no crisis should go to waste, stock bear Robert Prechter has emerged from the woods, grabbed a microphone, and predicted Mega Depression and a Dow 1,000.
Why, sane people ask, does Prechter’s prognosis get any play at all? Well, because of the fear surrounding the “crisis” of 2010. That would be a stock market that gave back a fairly normal, certainly unalarming, 17% of its April high after swelling more than 70% during the previous 13 months. Hmm–that doesn’t really reach crisis levels, does it? Well, it does if you toss in job losses, an epic oil spill, a Greek debt bomb, and a U.S. president who is so clearly in over his head that we are forced to acronymize his name to O.B.A.M.A. …
Not one to let this crisis go to waste, in waltzes Prechter. If Prechter didn’t exist, Drudge would have to invent him.
The howling insanity of Prechter and his fellow bears is rising. My theory about this is admittedly cynical. It could be called The Men Who Want to Be Roubini. The NYU econ professor and permabear, Nouriel Roubini, happened to be in the right place at the right time with the right call in September 2008. The result was that Roubini’s lecture fees zoomed from cab fare to 60K in seven seconds.
The Men Who Want to Be Roubini–which is to say rich and famous–include Prechter; Marketwatch’s apocalypse beat writer, Paul Farrell; and the oddest of them all, book writing blowhard Harry Dent, who predicted something like a Dow -2,000 in his 2009 book, The Great Depression Ahead.
Harry Dent drags around demographic statistics to prove his Dow collapse theory–and therefore should never be confused with another drag artist, Harry Denton, who sponsors weekly drag shows at San Francisco’s Starlight Club. (Just want to be crystal clear about this fact for anyone Googling Harry Dent.) Show maestro Denton, not Dent, is apparently consistent about his act. Dent’s act, on the other hand, is all over the map. In 1999 Dent predicted a 40,000 Dow sometime between 2006 and 2010. Others, like James Glassman, talked of a 36,000 Dow. The world was filled then with heavenly proclamations.
True enough, forecasting stock prices into the far far future can make a fool out of anyone. I myself predicted an 18,000 Dow in 2007 shortly after the index had popped over 14,000. I’m still living that one down. All I can say is that I’ve somewhat made up for that goof with a correct market bottom call in March 2009 and another correct market top call in April 2010. How? Simply by switching my methodology. I observe economic activity on the ground, talk to business owners and look at historical trends. I’ve given up on formulas and models, such as the Fed’s. Models work … until they stop working. Unfortunately, no one flashes a sign that says “model out of order.” Observation, interviewing and history work much better.
Observation, interviewing and history tell us that the current doldrums are not at all like 1932, but are somewhere between Japan’s post-bubble malaise and the U.S. in the mid and late 1970s. The potential of a long debt-deflation period resembles Japan, but with a crucial difference. Japan struggled–still struggles–with an insular and shrinking population and very little entrepreneurial pop left in the culture. Japan has nothing to replace its miraculous 1950s to 1980s period.
The U.S., on the other hand, still has a growing population and entrepreneurial longings. Also, Americans may say they hate debt, but we love it. Therefore most of the political forces in the U.S. will be pushing for inflation if the current debt-deflation scare scenario goes on too much longer. That’s why I think America is retracing its own 1970s, and not its 1930s or Japan’s 2000s.
For stocks, that means we likely face a range-bound market for a few years, as happened from 1977 to 1982 after the 65% recovery of 1975 to 1976. The range between mid-2010 and 2013 is probably from 8,000 to 12,000. Close enough, anyway. Good public policy could move the range toward 10,000 to 14,000. More bad public policy–Obama’s forte–could move it toward 7,000 to 11,000.
Even if it’s the latter case, forget Prechter and the other uber bears that call for utter and total collapse.
So which forecasters have credibility in this market? The two best ones that understand this range-bound market are Barry Ritholtz and Doug Kass. Encouragingly, Doug Kass thinks we’ve seen the 2010 low. Ritholtz is less sanguine.
The beauty of the internet is that with just a little research you can prove what an asshole blowhard people like Karlgaard are. He is a paid corporate media shill who will spout optimism until the entire fucking system collapses around him. Anyone who reads this drivel and listens to this shill is delusional. Here is the best of Rich Karlgaard:
“The story of the last 24 hours has been Bank of America’s plan to invest $2 billion in Countrywide Financial. Here, at last, was the event the financial world sorely needed. A big buyer, a smart buyer, had stepped in and set a price for damaged subprime paper.” – August 23, 2007
“In my Forbes magazine column, which closes today, I play ever the optimist. My take is that we don’t have a deep global liquidity crisis. We have a short-term credit crunch–which the markets are already handling quite well. You’d have to believe that no economic miracles had occurred in China, India, Southeast Asia, Eastern Europe and Ireland during this time; that none of the wealth created, at home and abroad, was saved and invested; and that no new financial technology was available to turn wealth into lendable resources. That’s baloney, and you know it.” – August 27, 2007
“Now, as this column goes to press, the Dow is down about 5% from its alltime high. Let me repeat: 5%. In comparison, on Oct. 19, 1987 the Dow blew up and lost 22.6%. In one day. Could 2007’s investors handle an equivalent one-day drop? That would be 2,991 points. I have my doubts. Today’s investors are wimps. We are whiners, à la Cramer. We take our bottled water into an office meeting lest we perish from dehydration. We wear bicycle helmets to fetch our double decaf, nonfat lattes. We are as fragile as china. So where are we now? The global economy is strong. There is no liquidity crisis. Okay, I’ll concede there’s a temporary credit crunch. But not a liquidity crisis.” – September 17, 2007
“Wesbury says the U.S. economy is in fine shape, far better than his peers say. Three percent growth is still likely. I’m in Spokane, Wash., today for a speech. Out here, per Wesbury, business leaders remain upbeat. I found the same optimism last Friday in Charlotte, N.C.” (Karlsgaard quoting Wesbury – blind leading the blinder) – September 18, 2007
“Now, for investors, has Wesbury given us any tips we can take to the market? I think so. As Wesbury says: The good news is that all this concern [about job growth] creates a “wall of worry” that the stock market continues to climb. I agree.” – October 15, 2007
“Which will hit $1,000 first–an ounce of gold or a share of Google? I think Google, even though it trails gold now. Which means I think: the U.S. dollar is bottoming.” (Google never reached $1,000, gold did. The dollar fell another 20%) – November 7, 2007
“Yesterday, the S&P officially “corrected” by sinking 10% off its recent high. Investors apparently swallowed their eggs and coffee with Lawrence Summers’ terribly gloomy piece in the Financial Times. Summers predicts–no, ordains–a recession. if you think my citation of David Brooks’ piece is yet more evidence of shallow optimism, let me tell you that I’m feeling the pain. My largest account of stocks is not off 10% from July 2007. It is off 20%. I’m in bear territory! But I remain optimistic, both about the U.S. economy and U.S. stocks.” – November 27, 2007
Today at sea, Ken Fisher, Brian Wesbury and Charles Payne revved us up with predictions of a blowout 2008 for stocks. You might protest that all three speakers have well-known bull biases. You would not be wrong. But it is also true that Fisher, Wesbury and Payne have called markets and picked stocks uncannily well over the last five years. Fisher said U.S. stocks are headed up … non-U.S. stocks higher still–just the same as this year. His reasoning: The same market conditions and financial forces apply. Equity yields are 50% higher than 10-year Treasury-bond yields, which historically favor stocks. The yen carry trade (borrow at low rates to buy stock) still works. And there is no credit crunch for large companies. Triple-A-rated companies can borrow at lower rates than they could six months ago. Therefore, both U.S. and non-U.S. public companies will continue to borrow money to buy their own shares. Or they will borrow money to take over weaker competitors. Both actions will push up prices.
Wesbury is bullish because the Fed is cutting rates even as productivity booms. A recession is virtually impossible under such circumstances, he said. Payne also sees no pain. Applying both fundamental and technical analysis, Payne said stocks were the cheapest in 25 years.” (shills and fools congregate) – December 10, 2007
Here is the clincher. The man was 100% invested in the market on December 14, 2007 and a RAGING BULL about 2008. His 4 picks for 2008 registered returns of:
Fidelity OTC -46%
Fidelity Balanced -31%
Fidelity Diversified Int’l -45%
Fidelity Spartan Int’l -41%