Permabear; It takes A Special Kind Of Stupid To Be One

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 prove 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 news.

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.

“You’ve been saying the same thing essentially since 2012 and have been consistently wrong,” said a frustrated Nations. He pointed out that on Tuesday, the Russell 2000 hit an intraday high and the Nasdaq composite reached an intraday and closing high. The Dow and came within points of their respective records.

“If someone piled into stocks in 2012, 2013, 2014 or 2015 they’ve done pretty well. Why were you so wrong then, and why should we think you’re so right now?” Nations asked.

Faber defended his call saying, “I warned of a correction in 2012 and we had one.” A correction is defined as a move of 10 percent or more from peak to trough, and in April 2012 through June 2012, the S&P 500 fell more than 11 percent.

“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

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

It turns out that the only recession was in his predictions, which is 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 that most of our subscribers are starting to perceive that succumbing to Fear is a dangerous strategy to adopt. Life and investing should not be stressful; stress is something that every Tactical Investor should abhor. Moreover, remember, stress comes down to perceptions; alter 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. Turns out, 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 investing 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.

Research

These resources offer various perspectives on the dangers of being a permabear and provide insights into why investors may miss out on long-term growth opportunities by always being pessimistic about the market.

“The Perils of Permabears” by Larry Swedroe: This article discusses the risk of missed opportunities that permabears face by constantly being pessimistic about the market. Link: https://www.etf.com/sections/index-investor-corner/swedroe-perils-permabears
“Why Being a Permabear is a Bad Idea” by Ben Carlson: In this blog post, Carlson discusses how permabears miss out on the market’s long-term growth potential by always being negative. Link: https://awealthofcommonsense.com/2018/10/why-being-a-permabear-is-a-bad-idea/
“The Permabear Syndrome: Why Pessimism is Dangerous for Investors” by Daniel Crosby explores the psychological biases that lead to permabear thinking and why it can be dangerous for investors. Link: https://www.marketwatch.com/story/the-permabear-syndrome-why-pessimism-is-dangerous-for-investors-2016-02-25
“The Danger of Being a Permabear” by David Merkel: In this blog post, Merkel argues that permabears are often wrong because they don’t consider the market’s long-term growth potential. Link: https://alephblog.com/2010/10/26/the-danger-of-being-a-permabear/
“The Cost of Being a Permabear” by James Osborne: This article discusses the financial cost of always being negative about the market and how it can impact long-term investment returns. Link: https://www.investopedia.com/articles/investing/042915/cost-being-permabear.asp