Bears Give Up

Prominent bears, Alan Abelson and Nouriel Roubini, have thrown in the towel and are no longer bearish. They are not the only ones as it is difficult to find any prominent bears these days. $55 billion flowed into equity mutual funds and ETFs in January, the most since February 2000. John Paulson, David Tepper and Ray Dalio have all come out bullishly recently. There is a very positive mood towards stocks from pundits, the general public and professionals.

This unanimous bullish sentiment is not generally seen at great buying points. When sentiment is this bullish there is usually a better buying opportunity ahead but it could take a while to get there. Extreme sentiment can persist for months and trying to fight it is a grueling process. While I am roughly market neutral I have not decided to fight this yet. If I do it will likely be via puts. With the VIX under 13 puts are cheap and give defined risk in case this rally keeps grinding higher.

4 comments:

Joe Conroy said...

Guess Abelson is not a perma-bear any more.  However, All my advisors are bearish which is scary:  Kass; Meisler; Arms; DeMark; Sozzi; Duru.

frank R said...

They are ALL Talking da Bull-Talk BUT NOT Walking da Walk !
Mkt Tops don't happen w/ 70% of da average mom/pop investors on da Sidelines ! 
Bearish Sentiment Prevails ;-)))

frank R said...

ditto !

frank r said...

there's apparently two frank r's... Looks like I'll have to change my name.