Wednesday, February 04, 2009

Fear and Loathing in Davos

Over the preceding months I have documented pretty thoroughly the remarkably pessimistic outlook investors share for the stock market and the economy. The February 9, 2009 issue of Newsweek has a funny column by Daniel Gross recounting his experiences at the World Economic Forum recently held in Davos, Switzerland.

Here are a few choice quotes:

[In Davos] the only bull market was in pessimism.

[The CEO's who attended] were treated to an avalanche of doomsaying.

Voices from hedge-fund manager George Soros to historial Niall Ferguson spun elaborate tales of catastrophe. Ferguson concluded that the U.S was destined for a decade of extremely lame growth. Economists were universally downbeat.

This year, failure and depression were [the chic topics].

[F]ew summiteers had the audacity to hope. The overwhelming consensus was things are really bad and getting worse.

I think this is yet more evidence that the U.S stock market is thoroughly sold out and that the next big move will be upward.


Dennis said...

The pessimists have been right for a year. I (and you) have been wrong. If you believe in induction, the logic of events is on the side of the pessimists.

karkar said...

maybe you dont get the "big" picture..soros might be more right than you..The next move well may be up..but the next big move will definitely down from wherever the up move leaves you..Remember this minor pop is due to some government plans

Anonymous said...

The stock market is always leads...but I think it's fair to say we will be in narrow range for the next 16 months. As day-traders, we don't need monster volatility just a few points here and there. Just mind your charts and take what you can.

Anonymous said...

I read tons of "everybody is so bearish it is going to end up bullish" analysis.Who exactly are those traders (other than EWI) who are bearish? Regards.

Carl Futia said...

Dear 12:25 pm

Look in the mirror!

Anonymous said...

When analysts start to issue downgrades now after stocks have been punished 70-90%, that's my indication to start nibbling(buying) these stocks.

curt said...

interesting conversations...i would say that as always there are 2 camps, as is human nature, we look for information that supports our view. If you watch CNBC its nothing but, "great time to buy". If you ask the average investor, I dont think they are super bearish, most i talk to say...if the media would shutup then things would get better, most still have money in the market and are "hoping" and expecting things will improve soon. There are TONS of economists who are saying, the recovery will start later this year. Thats not capitulation in my world!!

pursuitist said...

No, I think maybe it's time for you to look in the mirror. You're a decent trader and a horrendous forecaster of macro trend. At this point--more than a year of forecasting a bull market based on your perception of general pessimistic sentiment--even if you are right you would still be grossly on balance WRONG.

There were forecasters of the current crisis. Soros, Taleb, Roubini, Roach, among many others. Let's be clear that you were not one them. You are a trader with a cognitive bullish bias, who has developed strategies for protecting himself from his own weaknesses. Since you host a public blog with the potential for many subscribers to be LTBH investors who take what you say at face value--you should be very clear about who are, what you are doing, and how much of personal stake you are really taking in your own long term forecasts. The market has been irrational--to your thinking--longer than most investors and traders could have remained solvent. It's a testament to your preservation of capital skills that you have managed to keep yourself above water. But there is no way, and no reason, to try to resusitate your powers of long term prediction. That ship sailed.

Anonymous said...

Hi Pursuitist.

He has to do nothing as you don't pay for this blog. If you are so stupid to take anybody's advice without thinking so be it. Market need some meat like you. Sorry. And read post about "should you speculate". Carl how can you not be tired of this sh..?

Carl Futia said...

Dear Pursuitist:

Yes, as I have said on this blog before, I did miss this bear market. So What? My investment accounts were down 8% in 2008 while my trading account was up 77%. As this bull market progresses I shall do very well thank you, but the bears you seem to admire so much will get hosed (Soros excepted).

Taleb is the only other market person you mention. He no longer actively manages money - why?- he was a consistent looser for every option desk that hired him. Roach and Roubini are talkers, not players. Have any of these three beat the "buy and hold" strategy over the past 5 years? Almost surely not.

You, sir, have been taking pot shots at me for months. Please direct me to your blog where you post your trades when you make them.

Anonymous said...

Are you sure about your statement about Taleb? I ran Merrill's currency options in NY at the same time that Taleb with at Indosues and Credit Suisse and that was not the impression I had.

Carl Futia said...


I am very confident that my statement about Taleb is correct.