I have yet to hear a bull argument that has any currency. I keep hearing that "we're so far down" blah blah blah, but you could have made that argument a *year* ago and still been wrong. Down from what? I also keep hearing that we're so far beyond that average duration of the bear that we have to be bottoming. Depth and duration are worthless as bullish arguments because of the unprecedented nature of the boom. I've heard that we're cheap, but nobody has demonstrated to me *any* measure by which we are undervalued. I'd grant you *fair valuation* in a very few circumstances, but nowhere undervalued. And fair valuation *doesn't* make a market go up.
I've heard that the economy has bottomed and stocks always go up X% in the year following a market turnaround. That's irrelevant because it assumes that the economy has turned the corner, which it hasn't. None of the normal functions of a recession have been served.
I've heard that we've had this capitulation or that capitulation. Bullshit. Capitulation following *this* bubble is going to be so unmistakable, so severe, that even the diehard bears that saw this whole mess coming will be soiling their britches in fear of a collapse in the system. Capitulation, my arse.
The only bear argument that has lost currency is that things are overvalued. I keep hearing that the historic PE averages 15 and the usual bear market bottom is around 10. PE only makes sense when evaluated against the prevailing interest rates. However, there are several other valuation measures by which we *do* remain overvalued, and if I read history correctly, they are the measures that matter in severe bears. Price to book and price to sales matter in times like these because earnings are under compression, vanish, or are not trusted.
So - bulls aren't making any sense yet, and the bears still have some solid arguments. Stay short.
BC |
