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12/13/2005
Bear Corner: A Perfect Lie

My right-hand man -- nay, my partner and boss, the Wiz, has a mordant piece today about an easily refuted lie, and like most of the things we do together, it set me off on a tangent. The weekly financial columnist in his Monday, Dec. 12, piece has a beautiful example of a perfect lie, one that is impossible to refute but that serves to enhance the believability of related self-serving inexactitudes in the rest of the corpus.

After going into the usual 25 reasons that he is bearish for the year 2006, which we have chronicled often and systematized in PracSpec,* he states that he is not always a perfect forecaster of the market. The reason is that he still believes in things like sales, earnings and book value. This is true, of course, but what he doesnt say is that he has been consistently bearish for 40 years. Indeed, the Collab and I were unable to find one counterexample though we performed a content analysis of all of his columns from 1990 to 2002, and read almost all of the others. The columnist started his bearishness when the Dow was circa 600 in 1964 and has consistently been hauling out these same 25 reasons about an excess of enthusiasm and the lack of a true selling climax ever since.

As I was reading his latest and laughing, the Collab said to me, " What about his venerable and savvy friend who's very bearish now?" Sure enough, next in the column was a technical analyst whose record has been brilliant. He caught the entire Japanese rally, but frankly is not so bullish on it now. He sees a major technical catastrophe shaping up in the market for 2006 but sees a buying opportunity in any significant break. The friend is given anonymity, as is appropriate, for to be joined with a personage such as the financial weekly columnist, who perhaps has the worst record of forecasting in the history of forecasts, why, that would be tantamount to professional opprobrium.

However, to finish up the perfect deflection, the financial weekly columnist lets you know that he agrees with his venerable friend completely.

*A disturbingly unanimous expectation among professional forecasters for 4% GDP growth next year; the possible consequences of an end to the housing boom; a bleak forecast by the Anderson Forecast; Detroit's woes; the federal deficit; inflation that "continues to rear its insidious head"; high energy costs; high gold prices that "likely bode ill for the economy."

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