Grumpy Old Bears
Back in the early ’90s when I was a fairly newbie in the investment business, I got to know a futures trader / investor that I met online. (Yes, online and yes, early ’90′s) This was back in the day of Prodigy and dial-in BBSes and newsletter mailing list servers.
The population of people that were discussing investing and trading online was fairly limited back in the day, so although it wasn’t unusual that I ran into someone who shared some of the same interests as I (computers, technology, trading, investing) it was unusual that he lived only a couple of blocks from me.
We talked about going into business together at one point in time. We were going to put together a small commodity fund. We’d put together much of the capital to start the fund and we figured that the rest would come after we started running the fund.
He was more experienced in the markets than I and because of this knowledge gap I assumed that he was necessarily wiser as well. Back then, my most recent “real-world” experience involved the Crash of 1987. I do remember that he was a Bear. Not like the cuddly and warm and fuzzy kind of bear, but more like the kind that’s down on everything and the economy and the market: That kind of capital B kind of Bear, as in Bear Market. (I discovered some time later that he was not just a Bear, but a PermaBear.)
I couldn’t bring myself to completely commit to the new business. After a while, my unwillingness to take that final leap pushed a wedge into our fledgling little plan and our friendship. I stalled. He took it personally, got angry with me and we haven’t been in touch since (except recently, which is the inspiration for this post).
The legacy that I was left with was that I adopted a bit of a generally dour outlook on the world at the time and I allowed it to color many of my business relationships from that era. Regrettably, I was most pessimistic about the markets at the EXACT TIME we were beginning an historic 10-plus year bull market. Even though I recognized that “Even a stopped clock is right twice a day”, I had not enough experience in the markets to know that the clock was stopped.
Over the next couple of years the world changed, the markets changed, I changed, everything changed. Everything that is, except the outlook of the PermaBears. That’s when I truly understood that there is a certain percentage of people in our business who are permanently convinced that the economic outlook is never good, no matter the facts.
I bring this up now because we’ve hit a few economic bumps in the road over the last several years and the PermaBears have come out of the woodwork wearing their “I told you so” banners on their sleeves. Yes, economic events have roughly paralleled many of their longstanding viewpoints. But we should remember that for most of the PermaBears it’s not because they’ve made a timely call… it’s because their clocks are stopped.
I just wanted to convey that you shouldn’t put too much weight on many of the things you may be reading about our economic doomsday. It’s akin to looking at your broken clock as it happens to show the correct time and assuming that it has somehow fixed itself: You’re going to be wrong again in about a millisecond.
