THE IDIOT-MAKER RALLY: Two Years Of Making Gurus Look Dumb
Gus Lubin and Meredith Lepore
Jan. 25, 2011
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During this period, countless gurus have said they don't believe in the rally and told you to sell.
MARCH 2009: Nouriel Roubini predicts new lows in the next 18 months
"During the last recession, the economy bottomed out in November 2001 and
GDP growth was robust in 2002
but the U.S. stock markets kept on falling all the way through the first quarter of 2003.
So not only were the stock markets not "forward looking,"
they actually lagged the economic recovery by 18 months--rather than lead it by six to nine months.
A similar scenario could occur this time around.
The real economy sort of exits the recession some time in 2010,
but deflationary forces keep a lid on the pricing power of corporations and their profit margins,
and growth is so weak and anemic,
that U.S. equities may--as in 2002--move sideways for most of 2010.
A number of false bull starts would occur as economic recovery signals remain mixed.
Thus, most likely, we can brace ourselves for new lows on U.S. and global equities in the next 12 to 18 months."
--Nouriel Roubini on March 12, 2009
Dow: 7,170
Dow today: 11,971
MARCH 2009: John Mauldin say
bulls will get their hopes crushed over the summer
“So, I know a lot of you have stayed in the market the whole time it has been falling
and are now wondering what to do.
If you have a ten-year time horizon you probably can buy here and do OK.
But I wouldn't. I think this market is going to have more problems
as we confront the real possibility that we will get some really poor earnings for the first and second quarters.
The economy is simply weak, and that weakness is hitting more and more companies.
From exporting companies to the big international firms, a global slowdown is hitting almost everyone.
Even hospitals are being challenged.
We could see a real bear market rally lure investors back in, just to crush their hopes this summer.”
-- John Maudlin on March 14th, 2009
Dow: 7,223
Dow today: 11,971
APRIL 2009: Dylan Ratigan says
this is a suckers' rally, no question
Blodget: Last question.
You've been right in the middle of this meltdown day after day, interviewing the smartest people, etc.
So is this a new bull market, or is this another suckers' rally?
Ratigan: Suckers' rally. No question.
That's not an indictment of the judgment of the market.
That's just my perception of the ability of the banks to function in a timely fashion,
the ability to create meaningful amounts of jobs in the immediate future,
and the as-yet unrecognized meaningful losses to come in commercial real-estate and other asset classes
-- Dylan Ratigan on April 10, 2009
Dow: 8,083
Dow today: 11,971
MAY 2009: Andy Kessler says
"this sure smells to me like a sucker's rally"
"Is this the dawn of a new era? Are we off to the races again? I'm not so sure.
Only a fool predicts the stock market, so here I go.
This sure smells to me like a sucker's rally.
That's because there aren't sustainable, fundamental reasons for the market's continued rise.
-- Andy Kessler on May 12, 2009
Dow: 8,469
Dow today: 11,971
JUNE 2009: Michael Markoski says
"the markets are in the later stages
of a powerful bear market rally that is close to its peak"
"I believe that the markets are in the later stages of a powerful bear market rally that is close to its peak.
I expect the market to trade in a narrow trading range until late this summer
before it starts to head down again this fall."
--Michael Markowski, founder of Stock Diagnostics, on June 2, 2009
Dow: 8,740
Dow today: 11,971
JUNE 2009:
Glenn Neely predicts the S&P will decline 50%
in the next six months
"Technically speaking, according to NEoWave a correction began at last October's low ;
the March-June rally is the final leg of that correction.
The March-June rally is now ending, allowing the bear market to resume.
During the next six months, the S&P will decline 50% or more, breaking well below 500!"
-- Glenn Neely, founder of NEoWave Institute and prominent Elliott Wave analyst, on June 16, 2009
Dow: 8,504
Dow today: 11,971
JULY 2009: Dave Rovelli says "If you were to jump in right now, you're crazy"
"If you were to jump in right now, you're crazy. On the same front,
if you're 35, 40, 45 years old and if you do your research and
you buy like a Wells Fargo or a Merrill and it's going to survive,
it could be the opportunity of a lifetime. Take small little nibbles."
-- Dave Rovelli, managing director of US equity trading
at Canaccord Adams, on July 17, 2009
Dow: 8,743
Dow today: 11,971
AUGUST 2009:
Bob Janjuah says
"The next ugly leg of the bear market begins
as we get into the July through September 'tipping zone'"
"I expect this risk rally to continue into – and maybe through – a large part of August.
What happens after that?
The next ugly leg of the bear market begins as we get into the July through September 'tipping zone',
driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."
-- Bob Janjuah on Aug. 12, 2009
Dow: 9,361
Dow today: 11,971
AUGUST 2009:
Doug Kass says markets are overshooting to the upside
"I believe that the markets are now overshooting to the upside and
that the U.S. stock market has likely peaked for the year...
A double-dip outcome in 2010 represents my baseline expectation.
When the stimulus provided by the public sector is finally abandoned,
it seems unlikely to be replaced by meaningful strength or
participation by any specific component of the private sector,
and the burgeoning deficit (described above) will ultimately require a reversal of policy,
leading to higher interest rates, rising marginal tax rates and a lower U.S. dollar.
My forecast assumes that the market's focus will shortly shift f
rom the productivity gains that have been yielding better-than-expected
bottom-line results toward these chronic and secular worries."
-- Doug Kass, on August 26th, 2009
Dow: 9,543
Dow today: 11,971
OCTOBER 2009:
Robert Prechter says "stocks peaked in September"
"Stocks are very overvalued. Stocks peaked in September and are back in a bear market."
The S&P 500 will probably fall “substantially below” 676.53,
the 12-year low reached on March 9, he said.
His projection implies a drop of more than 34 percent from last week’s close of 1025.21.
It rose to 1031.77 at 10:05 a.m. in New York.
-- Robert Prechter on Oct. 1, 2009
Dow: 9,509
Dow today: 11,971
OCTOBER 2009:
Joseph Stiglitz says the markets have been irrationally exuberant
“There’s a lot of risk going ahead of some big bumps.
There’s a very big risk that markets have been irrationally exuberant."
-- Joseph Stiglitz on Oct 6, 2009
Dow: 9,731
Dow today: 11,971
OCTOBER 2009:
Gary Shilling predicts a new low on the S&P
"I think what's happened is still a bear market rally.
And as a result, whether we hit new lows or not remains to be seen.
I think we very well could go back and test that 666 on the S&P,
maybe go a bit lower than that. And this decline may very well spill into next year."
--Gary Shilling on Oct. 23, 2009
Dow: 9,972
Dow today: 11,971
OCTOBER 2009:
Jeremy Grantham says "This is the last hurrah"
"A large rally is far more likely to prove a last hurrah...
a codicil on the great bullishness we have had since the early 90s or,
even in some respects, since the early 80s...
"“he U.S. market will drop below fair value,
which is a 22% decline (from the S&P 500 level of 1098 on October 19).”
-- Jeremy Grantham around Oct. 19, 2009
Dow: 9,972
Dow today: 11,971
OCTOBER 2009:
Bill Gross says the rally is at its pinnacle
"Investors must recognize that if assets appreciate with nominal GDP,
a 4%–5% return is about all they can expect even with abnormally low policy rates.
Rage, rage, against this conclusion if you wish,
but the six-month rally in risk assets—
while still continuously supported by Fed and Treasury policymakers—
is likely at its pinnacle. Out, out, brief candle."
-- Bill Gross on Oct. 27, 2009
Dow: 9,762
Dow today: 11,971
DECEMBER 2009:
Albert Edwards says "It is time to sell"
"For Japanese investors, it took some time to learn the new metrics of investing.
Today, investors have no such excuse...
The leading indicators have begun to turn down in the US and so risk assets are therefore dangerous.
Almost no-one will be willing to predict renewed global recession and no-one will predict new lows in equities.
And with the market so bullish a cyclical failure will come as a crushing blow to sentiment.
It is time for caution. It is time to sell."
-- Albert Edwards around Dec. 9, 2009
Dow: 10,337
Dow today: 11,971
DECEMBER 2009:
Mohamed El Erian says stocks will tank within one month
"We're on a sugar high. It feels good for a while but it unsustainable."
Claims: Stocks will drop 10 percent in the space of three or four weeks,
bringing the Standard & Poor's 500 index below 1,000.
-- Mohamed El Erian on Dec. 28, 2009
Dow: 10,547
Dow today: 11,971
JANUARY 2010:
Richard Russell says "The fun's over"
"Despite it all, I continue to believe that since March we have been in a bear market correction,
and not a new bull market. For this reason,
I take the current rotten market action very seriously.
If I’m correct, it this is the beginning or a top-out in a bear market rally,
then I can tell you that the “fun’s over,” and the really bad times lie ahead."
-- Russell on Jan. 22, 2010
Dow: 10,610
Dow today: 11,971
MAY 2010:
Keith McCullough says "Sell all U.S. stocks now"
"Sell all U.S. stocks now. We're heading to 1018...
When markets get this unstable, it doesn't take much to destabilize market."
-- Keith McCullough, Hedgeye CEO, on May 28, 2010
Dow: 10,136
Dow today: 11,971
JUNE 2010:
George Soros says the market is overextended
"We have just entered Act II..
.The collapse of the financial system as we know it is real and the crisis is far from over...
1930's style budget deficits are essential as counter-cyclical policies,
yet many governments are now moving to reduce their budget deficits under pressure from financial markets.
This is liable to push the global economy into a double-dip."
-- George Soros around June 7, 2010
Dow: 9,932
Dow today: 11,971
JULY 2010:
Bill Fleckenstein says
Bulls are getting too optimistic
"There is a reasonable probability of a decent rally getting under way..
.However, it will be just that: a rally. If things play out along those lines,
it may very well be time to start thinking seriously about putting on some short positions,
preparing for a move back down."
-- Bill Fleckenstein, president of Fleckenstein Capital, on July 9, 2010
Dow: 10,198
Dow today: 11,971
JULY 2010:
Robert Prechter says traders should short the S&P 500
"The selling pressure will abate at times, but by the end of 2010,
stock prices should be much lower..
.Experienced traders should be short the S&P 500 index...
The current bear market will be the biggest in nearly 300 years."
-- Robert Prechter on July 15, 2010
Dow: 10,359
Dow today: 11,971
OCTOBER 2010:
John Hussman says the market is
"overvalued, overbought, overbullish"
"As of last week, the Market Climate for stocks was characterized by rich valuations,
elevated (but not extreme) bullish sentiment,
generally positive but overbought price trends,
and continued negative economic pressures.
Overall, our measures suggest an overvalued, overbought, overbullish condition
, but with shorter term factors struggling
between emerging economic weakness and overbought conditions on the negative side,
and speculative trend following on the positive side.
For our part, the current set of conditions is associated with an unfavorable return/risk profile,
so the Strategic Growth Fund and the Strategic International Equity Fund remain well hedged."
-- John Hussman on Oct. 11, 2010
Dow: 11,011
Dow today: 11,971
NOVEMBER 2010: David Rosenberg says the market is overbought and all signals are negative
"Maybe instead of going and retesting the
April highs, which now almost seems like a given to the pundits we read over the weekend,
maybe what we have on our hands is a move to the right shoulder in what
looks to be a classic heads-and- shoulders pattern emerging.
Hey, in a market governed largely by technicals and sentiment, these things matter.
And, as for sentiment, most of these indicators have
very quickly moved to “contrary negative” bullish readings.
Not only that, but the market has become
seriously overbought with almost three in four stocks
now trading above their 50-day moving averages compared with one in four earlier this month."
--David Rosenberg, on Sept. 27, 2010
Dow: 10,860
Dow today: 11,971
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