The Compound and Friends - Permabears are Ridiculous People (with Josh and Michael)

Episode Date: April 6, 2019

This week, one of the most well known permabears came out and took a victory lap despite the fact his commentary has been negative about stocks forever.  But it's a trick...  People can pick different indexes, use price versus total return data, cherry pick from among their own statements and do all sorts of other jiujitsu to hide their bad calls. Investors would do better to ignore all of it, but this is hard - so being armed with this knowledge is the next best thing.  Read Michael Batnick's explanation here:  https://theirrelevantinvestor.com/2019/04/02/how-to-be-wrong-and-think-youre-right/ Enable our Alexa skill here - "Alexa, play the Compound show!" https://www.amazon.com/Ritholtz-Wealth-Management-LLC-Compound/dp/B07P777QBZ Talk to us about your portfolio or financial plan here:  http://ritholtzwealth.com/ Obviously nothing on this channel should be considered as personalized financial advice just for you or a solicitation to buy or sell any securities. Please see this 3,000 word terms & conditions disclaimer: https://thereformedbroker.com/terms-and-conditions/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, I'm Josh Brown. Welcome to Live from the Compound. Recently, a very famous, well-known perma-bear decided to take a victory lap on his 23-year call to not be invested in equities or to downplay strategically underweight equities. And obviously, it's the most ridiculous thing you've ever seen and heard. We're going to get into this concept that somebody could be this wrong and still find a way to use data and say that they were right. Mike, we're not going to name names today. We're going to be gentlemen. However, I was pretty offended reading about the perma bear who's been strategically underweight stocks for 20 some odd years and thinks it was a good decision and thinks that people would have benefited by listening.

How was this particular victory lap able to have been taken? What games are being played? Well, the problem with this is that he says that he's been, he said, quote, my consistent uber bullishness on Western government bond markets never seems to attract as much attention as my extreme bearishness on equities. So he's been saying buy treasuries and global sovereigns and be short or out of stocks. But the problem is – And he wants credit for the long bond call. Yeah, but the problem is, first of all, there's a lot that goes into a 23-year call.

You know what I mean? Like nobody lives in 23-year periods. Nobody woke up 23 years later after listening to him and said – That's the stupidest thing ever. Yeah, I agree. But so the point is, like there's records on the internet. We have the truth. There are receipts.

There are receipts. And in 2011, he was calling for hyperinflation. Same guy. And if you're calling for hyperinflation, you do not want to own bonds. In fact. You'd be saying short bonds. He said on a 10 year view, I think government bonds are a horrible investment. Yes. But you're just cherry picking, Mike. view, I think government bonds are a horrible investment. Yes.

But you're just cherry-picking, Mike. Yeah, I'm just cherry-picking what he said. So here's the thing. You're just cherry-picking the words that came out of his mouth. I actually think that there is a reasonable place for people like this in the investment community because people – Where? In the back office? Because people want to hear the other side.

It's not the other side. The other side is, I have been bullish for three years and now I'm getting cautious. That's the other side. Yeah, but let me play devil's advocate. I am always negative. It's not the other side. What about people that are bearish and bullish and they're always wrong? Is that any worse or better? No, it all sucks. But I'm just saying, there is no place for somebody whose permanent view is that everything is going to turn out badly.

Oh, really? Then how come he keeps getting airtime? Of course there's a view. There's room. Because he happens to write very provocative, interesting things. If only it were a think tank paying him and not a Wall Street investment bank. I wouldn't have any problem with that. All right.

Do you think that at this point people are actually trading or investing based on what he says? think tank paying him and not a Wall Street investment bank. All right. But I wouldn't have any problem. But all right. Then let me. Do you think that at this point people are actually trading or investing based on what he says or what people say? That's the good news. Don't you think it's just like gossip? And that's the good news. And I also believe in freedom of speech. So I don't have a problem with it being said.

The only issue I have is pretending that you didn't say it. Well, that's that's crap. OK, well, that's what's going on. He's basically saying like, well, if you were to listen to me, even though you missed the stock market, you would have made so much in bonds. That's obviously a lie. And you could tell it's a lie because there's no data on the chart, at least the version that we saw.

What index is it? We had to reverse engineer and figure out. And then our dividends being included. You could name like right off the top of your head the half dozen perma bears. Yeah, it's the same. There's like five of them.

But like Siegel gets made fun of for being a perma bull even though he's kind of not. He's totally not a perma bull. But there's not really, like who's a perma bull? I don't even. Well, every financial advisor

is a perma bull because we understand that there are going to be negative periods in the market, but that we have to minimize their impact on clients and we have to explain that they are the very, very small probability. I don't think that's being permabullish though. No, I know, but it's kind of our job to explain to people like bad things will happen and we're prepared for them to the extent we can be. But overall, things will work out. You have to believe that. Of course, but the perma bears are calling for S&P 1,000 all the time. There's nobody who's saying Dow is 90,000 except for Ram Capital is a joke.

Like nobody actually is perma bullish like that. Oh, nobody's like that goofy to the upside No nobody The way that these guys are to the downside Right nobody Well the good news is that they almost Almost none of them have any influence In terms of like the way money is being managed right now

Well the people that they influence Are people that want to be influenced Like there's obviously a gigantic audience For end of the world shit I went to one of those live And I met Doug Casey And he was the nicest man in the world to me I went to one of those live and I met Doug Casey and he was the nicest man in the world to me. He never met me, never heard of me,

but I was speaking at the event. It was in Vancouver. It was like a gold event and then they had like this whole side channel of just psychopaths. But Doug was like very friendly, very reasonable, very calm. And then he goes on stage

and it's just fucking brimstone. It's like, but the room loves it. Everyone is there for it. There are people there from Asia, from Eastern Europe, obviously Canada. They're there for that. They want that version where things were better when they were young. Now they're older. The world is going in the wrong direction.

The world doesn't need them anymore And they Jiu-jitsu that into Everything's Gonna fall apart No it's interesting There's one Young perma bear

Or one young person Screaming about the end of the world Like They all tend to be older people Oh yeah I know He's my age He's a schmuck Will there be

Colleagues of mine Or maybe colleagues People my age In 20 years Will there be perma bear or maybe colleagues of people my age in 20 years? Will there be perma-bear? Yeah, but you know what they are though? Those people have gravitated more toward crypto and they don't have a beef with the stock market. They do not like central banking and they do not like central planning. But they're like crypto libertarians and they're like the money system is going to fall.

But then this will rise in its place. What if they're right? Well, obviously they're right. the money system is going to fall, but then this will rise in its place. What if they're right? Well, obviously they're right. It's only a matter of time. Let us know what you think. Is there any place on wall street for someone who tells you upfront, they will always be negative. Is there any purpose of ever listening to those people? We want to hear what you think. Leave us comments. Make sure you subscribe. We love your feedback. We'll talk to you soon.