Discussion in 'Trading' started by noob_trad3r, Oct 13, 2010.
All my short puts are up 30% over the last 5 days.
Big profits. Thanks Bernanke and Obama.
I'm a Lakers fan myself.
You better hope your bull doesn't get drug-tested, though.
The cocktail of roids, growth hormones and amphetamines will get him in trouble...and he'll lose his strength and pain tolerance soon enough as it is.
Why Do Bears Seem Smarter Than Bulls?
Published: Wednesday, 13 Oct 2010 | 11:58 AM ET
By: James Altucher, Managing Director of Formula Capital
I admit it: Iâm jealous of Nouriel Roubini aka Dr. Doom. Heâs been dead bearish this rally (see our joint CNBC appearance on July 5) and I vaguely recall him being bearish at the market lows in March, 2009. But, to be fair, in August 2006 he was calling for a housing crash as well. So I give him some credit.
But Iâm jealous that despite being non-stop bearish over the past 1.5 years since the lows he still gets quoted everywhere, speaks at every conference, has supposedly 1000s of institutional clients paying for his wisdom, and has time for non-stop parties that he will never invite me to. Well, to be fair, he told me he will invite me to one if and when we go into a double-dip recession. But since that is not happening, the likelihood is that I will never go to a Roubini party. Why is he, and every other bear (Howard Ruff, Peter Schiff, etc), quoted everywhere all the time even though in some cases for decades theyâve been dead wrong (see this Howard Ruff quote from 1980 (read the italics)). In fact, perusing the message boards, optimists on the economy are often referred to as idiots and morons even though most metrics for the economy have gone straight up since mid-2009 and the stock market is about 80% higher than it was at the lows.
So why are the bears often seemed smarter or more in tune than the bulls?
1) Laziness. People want justification to not work harder (âif the world is going to hell then why should I botherâ).
2) Evolution. Peopleâs brains are hardwired to respond more to signs of danger. Our brains can get fixated, and then addicted, to the negative more than the positive.
3) Fitting in. Because we all have a need to be accepted, liked, and listened to, people are likely to share bad news than good news (because they know that #2 above will get them to be listened to if its bad news).
4) Pattern recognition. Because of #2, people will notice bad events more than positive events as they happen and more easily link those events to the people who âwarned themâ.
Consequently, people begin to overgeneralize ("we just had a lost decade, so STOCKS ARE BAD").
Two steps to avoid the pessimism:
1) Remind yourself of the evolutionary tendency to latch onto the negative (and then to subsequently overgeneralize)
2) ask yourself what the agenda is of the people making the pessimistic claims.
3) Remind yourself that:
* 1.2 million jobs (net of all job eliminations) have been created in the past 12 months.
* Companies are beginning to spend their record high levels of cash (see point #13 in the link). Intel is buying McAfee in its first cash acquisition of a public company in over a decade, for instance.
* Apple is going to sell 45 million ipads next year
* Dendreon is curing prostate cancer
* Household debt obligations for consumers are back to 1995 levels.
* Google is making cars that drive by themselves
* McDonalds raised its dividend for the 28th year in a row (to 3.25%, significantly above what you would get on government bonds) and theMcRib has less fat than I thought it did.
* Marriott is blowing away earnings and the CEO is seeing no indication of any double dip.
Maybe the Bears get to go to all the parties, but long term the bulls should make money.
I wonder if we will have a bull market every week now.
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