Permabear: The Unique Mindset of Challenging Optimism

Being a Permabear is a recipe for disaster.

Updated March 2023

It takes a special kind of stupid to be a Permabear, the one that even a thousand hard slaps will not alter. Perma-Bears have a death wish; they beg to be taken to the cleaners for nothing else can explain this short-sighted thinking. A simple examination of any long-term chart will prove once and for all that being a Permabear is never going to pay off. No long-term chart can demonstrate that taking a bearish stance has ever paid off in the long run.

Whatever trend line you use, the 1st or the second one, the above 100-year chart of the Dow proves that Permabears are in the wrong when it comes to investing.

The solution is simple.

Focus on the simple factors which help determine the trend; factors such as mass sentiment and extreme patterns (technical analysis) are on the charts. The news is not an essential factor; in fact, toilet paper has more relevance than news; at least, it serves a noble function; one cannot say the same about the information.

Anyone that advocates giving into fear should be thrown headfirst out of the front door(figuratively speaking, that is) and never allowed back into your house or mind; fear never pays off; only the vendors of fear will make a handsome buck, the buyers will lose their pants, their shirts and their knickers too.

Marc Faber: The Peril of Being A Permabear

This dude has predicted predictions calling for the mother of all crashes since the inception of this bull (2009), but the only thing that has crashed so far are his predictions of a crash. He would probably make an excellent science fiction writer, for he seems to spend a lot of time concocting scenarios that have a very low probability of coming to pass.

During a heated exchange, an exasperated nation confronted Faber’s consistent bearish predictions since 2012. Nations argued that those who invested in stocks during that period saw substantial gains, questioning Faber’s accuracy. Faber defended his call in response, citing a 2012 correction as evidence. He remained resolute, believing that his warnings would ultimately be appreciated. Faber brushed off the criticism, stating that he is accustomed to detractors. The clash highlighted the contrasting views on market trends, leaving the question of who will ultimately prove right.

“I tell you when all is over people will love me for having warned them to have all their money in stocks,” added Faber. “I’m used to people like you who always attack me.”
“You’re accusing me of being wrong? I laugh at it,” Faber concluded. CNBC
Interesting Must Read: The Rich Get Richer And The Poor Get Poorer: War On Wealth

Here he states that we will experience a significant recession in 2018

It turns out that the only recession was in his predictions, the only thing that has been in a bear market for now. Hence if you are a Permabear on his ability to predict the market direction, it could pay off.

Then he goes on to state the party is going to end in 2018

Random Musings on Being a Permabear

First, we hope most of our subscribers start to perceive that succumbing to Fear is dangerous. Life and investing should not be stressful; stress is something that every Tactical Investor should abhor. Moreover, remember, stress comes down to perceptions; it alters the perception, and one can shift from being stressed to being serene.

Experts love to push the argument that investing is hard and takes forever to master this art. Remember that investing is an art, not a science and art is meant to be enjoyed. So are the masses starting to jump on the bandwagon after this strong turnaround; the obvious answer would be yes. The not-so-obvious answer would be no. Continue reading. At least in the first half of 2019, the not-so-obvious answer would be the right choice. The masses are still nervous, and until they start to dance on the streets, every strong correction should be viewed through a bullish lens.

The Current Bull: Unlike Any Other Bull Market

This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market, give or take a few months; after 2009, the game plan changed, and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as before 2009 and, in many cases, would lead to a faulty conclusion.

Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between), and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one.

The results speak for themselves; most of our holdings were in the red during the pullback, but now they are in the black, proving that one should buy when blood flows in the streets. It is a catchy and easy phrase to spit out but very hard to implement because the masses will opt for being shoved when push comes to shove.

Stock Market Update March 2023

In times of crisis, such as the current coronavirus pandemic, it can be wise to nibble at stocks with a long-term perspective. Rather than investing all your funds at once, consider supporting in smaller increments to average your entry price and protect against dips in the stock market.

At the Tactical Investor, we focus on longer-term plays that typically span several months. However, in times of crisis like these, we’re seeing a surge in the potential for huge profits, so our time frames have lengthened accordingly. While the short-term market may seem like a bloodbath, it’s also a breeding ground for exceptional opportunities that can herald the next bull market.

It’s easy to invest when everything seems rosy, but unfortunately, that’s when most assets are already overpriced. When times appear bleak, that’s precisely when the best deals can be found. So, consider taking a closer look at the market during these volatile times, and you may discover some hidden gems.

FAQ

Q: What is a Permabear?
A: A Permabear refers to an investor who consistently maintains a bearish outlook on the market, predicting downturns and advocating for a defensive or negative investment strategy.

Q: Why is being a Permabear criticized?
A: Being a Permabear is often criticized because historical data shows that the stock market tends to rise over the long term. Critics argue that Permabears miss out on potential gains by constantly expecting market declines and failing to take advantage of positive trends.

Q: What evidence is provided against being a Permabear?
A: The text suggests that examining long-term charts and trends reveals that being a Permabear does not pay off. It emphasizes that stock market charts demonstrate consistent upward movement, and taking a bearish stance is unlikely to yield positive results over time.

Q: What factors should be considered in determining investment trends?
A: The text suggests focusing on mass sentiment, extreme patterns (through technical analysis), and long-term chart trends. It argues that news is less relevant and that fear-based decision-making is discouraged, as fear rarely leads to favourable outcomes.

Q: Who is Marc Faber, and what are his views on market predictions?
A: Marc Faber is mentioned as someone who has consistently predicted significant market crashes, but these predictions have not materialized. The text implies that Faber’s accuracy has been questioned, with critics suggesting his scenarios have a low probability of occurring.

Q: How did Marc Faber defend his bearish predictions?
A: In response to criticism, Faber defended his predictions by citing a correction in 2012 as evidence of his accuracy. He expressed confidence that his warnings would eventually be appreciated and dismissed the criticism, stating that he is accustomed to facing detractors.

Q: What is the perspective on investing during times of crisis?
A: During times of crisis, the text suggests that it can be wise to take a long-term perspective and consider investing in smaller increments to average the entry price. It highlights that volatile times often present exceptional profit opportunities and recommends exploring the market during such periods.

Q: What is the suggested approach to investing during market downturns?
A: The text advises considering investments when the market appears bleak, as it is often when the best deals can be found. It encourages investors to look for hidden gems and emphasizes that the short-term market turmoil may present opportunities for substantial gains in the long run.

This article was initially published on February 22, 2019, and has since undergone continuous updates. The most recent update was carried out on March 20, 2023.