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The Most Hated Bull Market in History?
Posted by: Dr. Paul Price (IP Logged)
Date: December 3, 2013 09:11AM

The Lonely Bull

You can’t win if you don’t play.



Bearish forecasters point out that small investors have been net buyers of equity mutual funds over the past few months. They claim that might be signaling a market top.

Mom and Pop are usually wrong at key turning points. Those who know stock market history, though, aren’t likely to be worried by that particular factor right now.

Gallup just released its 2013 update as to the percentage of American adults who directly, or indirectly, own stocks.

This year’s reading set a new millennial low at just 52%.

When the DJIA set its previous record, in 2007, the number registered 25% higher, at 65% of the adult population. Many of the indicated holders have smallish stakes only via work-related 401ks.

The Crash of 2008 to 2009 was scary enough to induce selling at the bottom. It was traumatic enough that many individual investors continued to lighten their equity holdings on every rally up until quite recently.



Perhaps that is why the traditional "wealth effect" has failed to stimulate America’s economy. It is certainly why this is the most hated bull market in memory.

If you cashed out low it is galling to realize how much that mistake cost you. If you never owned stocks it is just one more proof of income inequality. The rich get richer while the average man is earning ZILCH under Bernanke’s ZIRP.

Valuations are no longer cheap, but they are not especially dear. The public has shown little enthusiasm for stocks based on their real money investment allocation.

Bonds look more vulnerable to decline than do equities even as they offer some of the worst yields in most of our lifetimes.

Fear of higher interest rates appears misplaced. With the national debt now over $17 trillion Washington owes so much money that the Fed will be directed to keep rates artificially constrained.

Whether you like it or not, today's market is just like Obamacare. You can either participate voluntarily, or you’ll be charged a penalty for not buying.

Stick with stocks.


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Re The Most Hated Bull Market in History
Posted by: AlbertaSunwapta (IP Logged)
Date: December 3, 2013 09:46AM

I'd be curious what percentage of individual investors will be near permanently out of the market due to being wiped out in the crisis or exiting the market for the long term real estate opportunities. In the 1920s investment trusts were all the rage for small investors. It wasn't until the 1970s when I started investing that they really came back strong, being renamed as mutual funds. Of course, in the intervening years most core investors had long been in the markets, however they too were gun shy through much of the 1930s and 1940s.

"Fear of higher interest rates appears misplaced. With the national debt now over $17 trillion Washington owes so much money that the Fed will be directed to keep rates artificially constrained. " Pretty much exactly what Arnold Van den Berg predicted a number of years ago. Nonetheless, much of the benefit from ZIRP occurs in getting to ZIRP and not in sitting with ZIRP. From there, in today's global markets, exchange rates (FX movements ) then become a central mechanism so my attention has shifted to watching, or more accurately, waiting, for issues that might blindside the bull market.

Additionally, while I can imagine rates fluctuating at a low level for a while (I once inherited a few hundred dollars worth a GofC 3.75%? perp. that they successfully issued in '37) it's hard to imagine the Fed forever promising to take up market slack by adding to its book. As such the market's discount rate selection may be highly variable going forward. Which is good, as "volatility is the friend of the investor".


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Re The Most Hated Bull Market in History
Posted by: JUDS1234567 (IP Logged)
Date: December 3, 2013 05:05PM

Regardless of whether we have remain invested or not since 2009, the fact is that we are almost guaranteed 0% returns or something sub-par from here. The only way for further gains is multiple expansion, not the way to bet in my opinion. And that's what it is here, speculation.


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Re The Most Hated Bull Market in History
Posted by: AlbertaSunwapta (IP Logged)
Date: December 3, 2013 07:50PM

^ "the fact is that we are almost guaranteed 0% returns or something sub-par from here" I wouldn't say that. All I can say is that by a growing number of market metrics the market is is no longer as cheap as it previously was and by some it is overvalued compared to historical data. Also, markets have historically turned downwards every few years and it's been a few years since the last bottom.

That said, there's nothing saying that good times (or prices) can't get better and better (or go from bad to worse for that matter). While we count on a regression to the mean (compounded - nonlinear) sometimes the future doesn't cooperate.

Morgan Stanley’s Adam Parker: The Most Bullish Strategist on Wall Street - MoneyBeat - WSJ

“Economically stronger China and Japan could also help. In fact, it isn’t preposterous to say that we could be in an environment of synchronous global economic expansion in 2014, and tapering or not, that isn’t fully in today’s prices.”

[blogs.wsj.com]


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Re The Most Hated Bull Market in History
Posted by: shaved_head_and_balls (IP Logged)
Date: December 4, 2013 12:43AM

Who hates the bull market? CNBC pundits? Cramerica? NYSE margin users ( at all-time high level)? AAII? Mutual fund equity inflow? I'm guessing that the author has recurring nightmares about stock market haters chasing him every night. This article is the type of hubris that marks a bull market's final stage--whether two weeks or two years. The "public" has never shown much interest in stocks. A minority of affluent people own the overwhelming majority of stock value. "you’ll be charged a penalty for not buying" This sounds like a desperate realtor trying to close the sale on an overpriced, unwanted house.


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Re The Most Hated Bull Market in History
Posted by: shaved_head_and_balls (IP Logged)
Date: December 4, 2013 12:46AM

No way to delete repeat posts?


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Re The Most Hated Bull Market in History
Posted by: Dr. Paul Price (IP Logged)
Date: December 4, 2013 07:37AM

Shaved-head, The penalty for not buying = no interest on cash when true 'cost of living' inflation is in the 8%-12% area - not the BS CPI-U reported by the BLS. Keeping money in fixed income has been the big loser - not stock ownership. Those who played the game are way ahead. People who sat in cash, bonds or even worse, went to gold, have been killed in terms of preservation of inflation-adjusted wealth.

Those who have been waiting for the next 2008-type crash to buy into stocks cheaply are the biggest real haters of the current bull market.


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Re The Most Hated Bull Market in History
Posted by: LwC (IP Logged)
Date: December 4, 2013 09:55AM

"…true 'cost of living' inflation is in the 8%-12% area - not the BS CPI-U reported by the BLS."

Still pumping John Williams's ShadowStats version of CPI, huh?

Regression to Trend: Debunking the Alternate CPI By Doug Short March 24, 2013

[advisorperspectives.com]


Aternate-CPI.php The Trouble With Shadowstats

[azizonomics.com]


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Re The Most Hated Bull Market in History
Posted by: vgm (IP Logged)
Date: December 5, 2013 07:30AM

There's plenty to support the title and thesis of this piece - including Howard Marks' view that equities are "under-owned and under-loved" as well as the alleged $1T+ sitting on the sidelines. I think many investors have been suffering from so-called 'recency bias' based on the trauma of 2008/9.

After the huge bullrun in the past 4/5 years, going forward the market will likely not produce outsized returns, though perhaps 0% is an exaggeration. But that will not necessarily be the fate of good value investors who are capable of thinking not only differently from the crowd, but differently AND better (a necessary condition for outperformance as Marks instructs us). Stock by stock valuation is the key.

Bargains are few and far between at the moment, but I'm happy holding my major positions in companies which were bought at much lower prices than today's, but which I believe still have a solid future - DTV, DVA, BAC, CHK, IRE, LYG - over a 3-5+ year period.

I think I'm in good company. People of the caliber of Ted and Todd at Berkshire will not be selling out of positions like DTV and DVA, nor Prem Watsa and Wilbur Ross out of IRE, if the market has the widely-anticipated correction or pullback.

Of course, many have been predicting a correction for a year or more while the markets were (again to quote Howard Marks) "very cheap".


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Re The Most Hated Bull Market in History
Posted by: shaved_head_and_balls (IP Logged)
Date: December 8, 2013 04:29PM

Paul Price: Last week the percentage of bearish investment advisors was 14.3%, the lowest level in 25+ years. Are those 14.3% the stock market haters that you see lurking on every dark street corner? The performance of long Treasury bonds from November 1981 to November 2011 outperformed the S&P 500--with a fraction of the risk. The phrase "the penalty for not buying" evokes memories of the bubble hucksters of 1999 and 2007. Seth Klarman has 30-40% cash. Are you smarter than he? Then show us your audited track record. What's really hated is a 10-year Treasury with a 2.85% yield. Ironically, the 10-year Treasury will likely outperform the stock market from today through the end of the next bear market. Those who don't understand this lack detailed knowledge of market history.


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