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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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Bear Corner
Daily Speculations chronicles the pessimistic cult, that strange group of people who are never ever bullish about the market. Our much-maligned book, Practical Speculation, studies their habits and record via a 10-year content analysis of the leading financial weekly's star columnist, as well as analysis through the lenses of ecology and propaganda studies. For our sins, neither of the big Dow Jones publications--The Wall Street Journal and Barron's--deigned to review the book. Nevertheless, we cannot resist continuing to highlight and systematically record the ululations, modes, patterns and resentments of the bearish clique.
2/13/2005
Bear Watch: The Latest From
the Leading Financial Columnist
After the usual litany of reasons to be bearish this week (the twin deficits, the tensions in North Korea, the coming letdown in Hewlett-Packard, the deterioration in the trade deficit if you take out oil, the totally unjustified rise in semiconductors that doesn't gibe with the industry's truly dismal outlook, what looks to be a speculative whirl rather than a sustained advance, his unnamed friend's bearishness for Wal-Mart when and if it goes through the support level of 50 which would have spillover effects on the economy and the market as a whole, the labored action of Wal-Mart right now, the imminent confirmation that the trend is definitely down in Wal-Mart, his friend's current bearishness and his past record of being right as rain), the chronic bear from the financial weekly reaches what to me seems like a new height of duplicity when he states, "Much as we hope we're wrong [in being bearish] -- the world's a much better place when the market's on the rise -- we're pretty sure we're we're not. "
Please tell me how a columnist who as far as we know has not been once bullish in over 2,000 columns (one or two might have slipped by our content analysis reported in PracSpec), can say that he hopes that the market will go up.
"The Trader column continues the mysticism by noting that "Since 2005 began, the S&P Index has crossed the range's center line at 1190 in 12 out of 29 trading sessions. Since the Nov. 10 upside breakout, the S&P has traversed that level 20 times." But how consistent is this with randomness to say that the center of a market over the previous 29 trading days has crossed that level 2/3 of the time. The Trader almost makes up for his mysticism by discussing the maxim that breakups of stocks provide the best payouts. He talks about Coach and Carter's from Sara Lee went through the roof. And that currently Citi and Amex and Dean Foods and Cablevisions are proposing divestitures. The performance of such spinoffs might be expected to be good on the theory that incentives would come more into play when the executives can be directly rewarded individually for performance of their specialized divisions rather than noted in the grand scheme of things as part of an aggregate. It's worth a study.