GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Doug Kass: Market is Due for A 10% Correction

January 12, 2010
guruek

guruek

80 followers
Doug Kass, the man who correctly called the subprime crisis and the March 2009 bottom, now calls for a stock market correction.

Short term, Kass thinks the market could go even higher but certainly clouds is gathering at the horizon as negative catalysts are building up.

What could bring the market down include sluggish employment, pressure in the commodities space and the threat of higher interest rates.

Watch the video:


























Rating: 3.4/5 (14 votes)

Comments

juliet
Juliet - 4 years ago
Hang on, did I get that right? The market could go up and then it could go down? Or possibly vice versa? Wow, that's quite a news flash.
cm1750
Cm1750 premium member - 4 years ago
Any time people try to predict medium-term movements in the markets, it smacks of intellectual dishonesty.

I almost fell over today when a "strategist" called for a 20-30% drop before a huge rally to Dow 15,000.

http://www.cnbc.com/id/34865032

Furthermore, he bases this rally idea on the election cycle, which is a true phenomenon that says the 3rd year of the election cycle is a good one for the market as the party in power does everything it can to bolster the economy pre-election.

As Jeremy Grantham has pointed out, we have already seen this 3rd year effect in 2009 as the gov't threw the kitchen sink of stimulus to save the markets, thereby front-loading this effect in year 1 of the cycle. Maybe if this charlatan strategist understood why the election cycle occured, he would not be saying such stupid things. The quality of CNBC guest never stops amazing me.

In Kass' defense, he merely is asserting that the market is on a speculative sugar rush that will end badly, which is not the same as predicting short-term market movements.
expectingrain
Expectingrain - 4 years ago
The problem with Doug Kass is he's been negative since *at least* S&P 950. Look at the timeline from his twitter account. He's been talking the market down and "expanding his short book" for several months and been completely wrong. This is why I have no interest in what "market strategists" come out with. His analysis is completely useless for an investor or trader. What does his comments mean? If we followed his advice, we would have missed most of the run up in the last 6 months. IMO guys like Joe Ponzio and Geoff Gannon's analysis is 10x better than people like Doug Kass, problem is guys like that don't get on TeeVee.
Sivaram
Sivaram - 4 years ago
EXPECTING GRAIN: "His analysis is completely useless for an investor or trader. What does his comments mean? If we followed his advice, we would have missed most of the run up in the last 6 months. IMO guys like Joe Ponzio and Geoff Gannon's analysis is 10x better than people like Doug Kass, problem is guys like that don't get on TeeVee"

I think people should keep in mind that Dough Kass is a trader. That's why he is on CNBC's Fast Money. Would Geoff Gannon or Joe Ponzio, even if given the chance, show up on Fast Money? Not really.

I don't follow traders very much but Kass appears to have a good record over the last 3 or 4 years. I don't pay much attention to him beause he is a trader (I'm not) but I do listen to the odd interviews that I run across (because he tends to be a contrarian and I'm trying to be.) He isn't perfect but I think he is outperforming nearly all the value investors.

To see how much of a difference there is between a trader and a long-term investor, consider the following:

If someone says the market is going to decline 10% and rise slightly over 10% to get back to its original level in an year, that would mean very little to a long-term investor. After all, the price, from a long-term point of view, has basically stayed flat.

But imagine if you were a short-term trader. The fact that it declined 10% and then rose approximately 10% makes a huge difference. Not only could you have made 20% on the way down and up (by short-selling and going long), but it would have made a huge difference if it was the other way around. For instance, if the market rallied 10% and then fell roughly 10%, the trader may have posted losses (with the original trading strategy). But a long-term investor would see little difference between the two scenarios.

What all of us need to do is to figure out what strategy works for us. There are people who are very successful trading so if that works for you, go ahead. Some people may say it's gambling, or speculation or some such thing, but to me, any investment strategy is fine. Macro traders are considered speculators but some, like George Soros, have made a life out of it.
expectingrain
Expectingrain - 4 years ago
My point was if he is a trader he has been wrong for at least 200 S&P points. He's been bearish since summer. Of course he'll be right one of these days but no one talks about all his wrong calls.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide