People keep asking me why I don’t short the market right now if I am such a bear and believe in my forecast. I believe this is a very good question that requires an explanation.
First, I am not a bull or a bear. I am a money manager and an investor. My job requirements are fairly straight forward. To make money in both bull and bear markets. My current bearish stance does not come from a position of being a “Permabear” (as some people out there), but from a very well researched and analyzed position of being a money manager. Further, I often shift gears but only when the time is right.
For example, I was a BIG bear starting in 2006 warning anyone who would listen that our credit markets, real estate, the stock market and the overall economy would blow up shortly. Not many people have listened to my advice. Then in early 2009 as everyone was freaking out I came out and said that the bear leg is almost over and the time to buy will come in March of 2009. I was an all out Bull when everyone was crying and shorting the market.
Now, with the market approaching all time highs and fundamental picture deteriorating significantly, I am once again a bear. Both my fundamental and my mathematical timing work clearly indicate that the stock market and the overall economy are about to implode again. As I discuss on this blog I have no doubt about that.
However, I am not the dumbest bear in the woods. That means you have to follow the market and only short when the time is right. The timing is not right…… just yet. As I have mentioned many times before on this blog it is highly probable that the bull leg that started in March of 2009 will complete in March of 2014. Once it does, the market should roll over and head down hard.
Until that happens and until we get the confirmation that the bear market is in full swing there is no reason to go short. Quite the opposite. The market is still trending up and smart investors should continue to HOLD their LONG positions if they have any. Just as my advice indicates. (Although I wouldn’t buy any more right now).
I hope this helps with the understanding.
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