Barry Ritholtz dismisses talk of a bubble (2021)

I think we have to be careful about painting with too broad a brush when we talk about sentiment.  I can't ever recall in history where market bubbles were called so fervently and frequently in real time by participants, but we've been hearing people saying "this is a bubble" now since - I don't know, is it five years?  Certainly off the lows last year the bubble drumbeat started.  It's kind of hard to see markets being overly optimistic when there's so much fear on valuation and bubbles.  I know it's very counterintuitive, but it's just not what you typically see when everybody throws caution to the wind and they're all in.

~ Barry Ritholtz, Bloomberg interview, March 23, 2021

Morgan Housel on the contradiction of the Berkshire Hathaway annual lovefest

Another version of [pluralistic ignorance] is when everyone thinks they’re a contrarian. The heart of pluralistic ignorance is having misperceptions about how others in your peer group think. And that’s usually what happens when you have a view about an investment that you assume isn’t held by a large percentage of other investors. Take the Berkshire Hathaway annual meeting, which is coming up next week. It’s 40,000 people, all of whom consider themselves contrarians. People show up at 4 am to wait in line with thousands of other people to tell each other about their lifelong commitment to not following the crowd. Pluralistic ignorance at its finest.

~ Morgan Housel, "You Played Yourself," Collaborative Fund blog, April 29, 2019

Zachary Karabell thinks it is time to add risk

Risk. Mention the word, and many investment professionals pause. Traders, hedge funds, and a few quantitative firms and their algorithms may love risk. But these days, the preponderance of investors, advisors, strategists, and their clients—not to mention the individual investor—see risk as a negative to be avoided. And that is why, dear readers, it may be time to consider adding some to clients’ portfolios.

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Given investors’ paltry appetite for anything that has a whiff of risk, and given how crowded the “safety” trade remains, it is an opportune time to consider investments that, relative to one’s current allocation, appear riskier.

~ "Investors Can Afford to Take on More Risk," Zachary Karabell, Barron's.com, September 18, 2017

Tony Dwyer thinks "fear dominates market activity" (2000)

The history of the market has shown us that, when fear dominates market activity, it's an opportunity to buy stocks at a better price.

~ Anthony Dwyer, chief market strategist, Kirlin Holdings, as quoted in The Wall Street Journal, February 3, 2000

Stephen Drexler: "the idea that we're in a bubble is crazy"

Everyone is so negative, which is highly positive for share prices.  Bull markets don't end like this.  The idea that we're in a bubble is crazy.  This could turn out to be the longest-running bull market in U.S. history.  [Before it ends], you'll see the average investor embracing the market.

~ Stephen Drexler, senior portfolio manager, Wells Fargo Advisors in Colorado Springs, "Taunting the Bull," Barron's, October 17, 2016

Todd Salamone: Sentiment suggests only modest pullbacks

The sentiment backdrop continues to suggest that if pullbacks occur, they will be modest.

~ Todd Salamone, "Monday Morning Outlook," September 20, 2014

Aaron Task on the absence of irrational exuberance (2014)

I don't see much of any signs of irrational exuberance.  We've got the Shiller piece.  We're here talking about things people are worried about.  Who is out there banging the table saying, "you've gotta own stocks, they're fantastic, they're great, buy 'em here?"  Everyone thinks the wheels are about to come off the bus.  So until we get to a place where everyone says you can't lose in the stock market, then call me and talk about irrational exuberance.

~ Aaron Task, Yahoo Finance interview, August 18, 2014

Paul Schatz: Bull market climbing a wall of worry, on the verge of an "amazing glorious run"

In my 25 year career I've never seen a bull market more disavowed, more hated than this one.  People rationalize why the Dow should not be close to 17,000.  And until the masses stop worrying about why the Dow should be at any given point... this is how a bull market climbs a wall of worry.  Until the average person stops saying "it shouldn't be" and says "it should be," the bull market's gonna live on, much like happened in 2000 where the last couple of years everyone said "it shouldn't be here, it shouldn't be here."  And the final run up into the 2000 peak was this glorious run, albeit in very few sectors.  I don't think we're there yet.  I think before this bull market ends, you're gonna have an amazing glorious run in a narrow group of stocks and sectors and that's going to be the final straw that breaks the camel's back.

Paul Schatz, president, Heritage Capital, interview on Yahoo Finance, August 14, 2014

Jim Paulsen: "Confidence is still too low" for a recession

The U.S. has a large “confidence gap.” Most confidence measures are still only average by postwar standards. In our view, confidence is typically the central catalyst for a recession. When economic players become confident they engage in the type of excessive behaviors which necessitate a recession. It takes confidence to over-spend, over-borrow, over-lend, over-build, over-hire, over-tighten (the Fed), or over-invest (in risky assets). None of these behaviors are yet evident because confidence is still too low.

~ Jim Paulsen, Wells Capital Management, "Economic and Market Perspective," July 10, 2014

Ken Fisher remains bullish because "We're stil straddling skepticism and optimism"

Running out of steam is best seen via legendary investor John Templeton’s four-phase quote: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Upon reaching euphoria bull markets lack energy to propel them further. Bulls climb the legendary “Wall of Worry,” and when all worries wane to well-worn whitewashing, you’re out of steam.

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So I wait, watch and remain bullish, noting we’re still, in Templeton’s parlance, straddling skepticism and optimism, and, hence, abundant force propels this bull on. Without a wall we’re maybe halfway through.

~ Ken Fisher, "Only Two Things Can Stop The Bull Market," Forbes, March 26, 2014 (online version), April 14, 2014 (print version)

Dow Theory Forecasts uses contrary opinion to justify running with the bullish herd

Despite this year's rally, the 2008 meltdown is still fresh in everyone's mind, causing investor sentiment to remain skittish.  And that could be a good thing.  "The riskiest thing in the investment world is the belief that there's no risk," says Howard Marks, CEO of asset manager Oaktree Capital Group...

~ Richard J. Moroney, Dow Theory Forecasts, December 6, 2013

Jim Cramer: "Not a soul is bullish"

The only bullish aspect of today is not a soul is bullish and there seems to be no reason to rally.

~ Jim Cramer, Twitter, June 24, 2013

Ken Fisher: We're in "the middle of a bull market"

The notion of having a couple of 25% back-to-back years is something that would shock most people.  And we still have a world where most investors over the recent years have been lightening up on equities.  Overall, the notion that it's actually maybe the middle of a bull market, and there's a lot ahead - that's a really impossible concept for most people to get. 

I've got this part of me that's a big fan of John Templeton's line that 'bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria,' and I think we're kind of at the point in time where we have one foot in skepticism and one foot in optimism, and we haven't finished straddling that transition.

~ Ken Fisher, interview on Bloomberg TV, June 21, 2013

Barron's editors: housing bubble blowoff still to come

There seems to be a bubble in news coverage about the housing bubble, which shows editors aren't much different from investors in trying to latch onto a hot trend.  But which stories should contrarians bet against - ones warning of the bubble bursting or those explaining why house prices are unlikely to crash?  In the late 1990s, when tomes forecasting Dow 10,000 came out, bears were slaughtered before they were vindicated.  Indeed, the final blowoff is the most violent phase.  We could be at a point in housing analogous to 3000 on the Nasdaq - which hit 5000 before crashing to 1200.

~ Barron's "Market Week," May 30, 2005

Maria Bartiromo: 2-day correction is healthy and a buying opportunity

Finally my observation on this market sell-off today. This may sound strange. As an optimist I was happy the market stayed down and did not rally from the lows into the close. Why do I say that? Well, this market has been trading up in a straight line pretty much since November of 2012. In fact today and yesterday was the worst two-day drop since November. And still the S&P 500 and the Dow are up in the double digits year-to-date. This may be the moment market pros have been waiting for, an opportunity to actually get in at better levels, lower levels. So my point is seeing a pull-back is exactly what you would want from a healthy market.

The question of course has to be has anything really changed? And in some cases it has. Interest rates have begun to move up. The conversation on Wall Street has begun to shift, to not if, but when the Federal Reserve will slow down the stimulus by cutting the amounts of bonds it buys. And even amid the rally there remain a healthy level of skepticism - some 30% of accounts are sitting in cash. (You just heard that from [UBS Group CEO] Sergio Ermotti.)  At some point that money will come back into the market and go to work. And that point could be here in this pull-back. Because any clear-thinking investor knows, nothing goes up in a straight line.

Many traders I spoke with today told me they are hoping for further selling tomorrow because they want to see a clean sweep.  They want to truly believe that there is value to be had by getting in for the long-term at lower prices. And if we are down tomorrow, it would be the first three-day losing streak for the Dow this year. First three-day losing streak this year.  That's incredible, and not normal. There may be more selling to come.  In fact, it would probably be healthy if there was. But long-term, most people do believe it will once again be a buying opportunity.

~ Maria Bartiromo, "Maria's Observation," CNBC, June 5, 2013

Ralph Acampora: Dow 20,000, public investor "all in cash"

I see no speculation whatsoever...  People are starting to feel a little bit better.  They're willing to take a little bit more risk.  I think perhaps we're on the cusp of going from Phase 1 of disbelief to Phase 2, where we're starting to see belief and trust.  And I love it when people keep talking this market down.  And we haven't even talked about the public being all in cash and money markets and Treasuries.  Maria, this has got a long way to go.

~ Ralph Acampora, Altair Investment Solutions, as appeared on CNBC (quote starts at 2:54 on the video), May 3, 2013

(The DJIA just set a record, breaking 15,000 on May 3rd intraday.  Acampora predicted the Dow would reach 20,000 by 2017.  Keep in mind, he also predicted Dow 21,000 by 2011 on July 18, 2007 - right at the top of the credit - a blemish on his forecasting record interviewer Maria Bartiromo forgot to mention.)

Mark Hulbert on the value of VIX as a contrary indicator

Unfortunately, my research suggests that the CBOE’s Volatility Index (VIX, 13.53 close)  leaves a lot to be desired as a market-timing indicator. In contrast to what many contrarians believe, low VIX levels are not bearish. And high levels are not necessarily bullish either.

~ Mark Hulbert, "Letting the VIX tell us when to get out," MarketWatch, March 6, 2013

Ken Fisher on how stock market negatives are digested and discounted

Negatives continue to abound.  So why do I expect stocks to shine in 2013?  Because I’m not a cow, I’m a bull.  Let me explain: Most negatives you hear about are well known and widely discussed, digested and already priced into stocks.  If it’s widely known, it’s either wrong or will have little impact on stocks.

Fear of Europe?  We’ve fretted over it for three years while stocks rose.  Another Obama term—fully four years of fretting under our belts!  The debt crisis—we will be fretting about that forever.

Markets are designed to price in all widely known factors.  I see little now where the cud hasn’t already been chewed and rechewed.   What’s a cud?  A mass of semidegraded food that is regurgitated.  It’s comfort food for cows and other herd animals.   Following the herd can be dangerous to your financial health.

~ Ken Fisher, Forbes, January 2, 2013

Ryan Detrick (Schaefer's): More reasons to be bullish than bearish

There are definitely concerns out there, and we can't simply ignore them. A slowdown in China or more issues in Europe could put a major stop to the bull market, but overall, we continue to feel there are still more reasons to be bullish than bearish for longer-term investors. In the near term, some continuation of the recently choppy price action could occur -- but eventually, that will give way to higher prices, as the dour outlooks on the economy and stock market will once again be proven too gloomy.

~ Ryan Detrick, Schaefer's Investment Research, "Monday Morning Outlook," April 13, 2012

Fred Hickey on QE3

Maybe I've spent too much time in the basement, but it can't be any clearer to me that we're seeing an almost exact replica of what occurred last year.  Last year Ben Bernanke and a "galaxy of Fed officials" fanned out to pave the way for the next round of QE.  This year they're doing the same thing.  Stocks soared for months before and for months after the implementation of QE2.  Now we're in the months leading up to the implementation of QE3 and the stock market has begun to soar again.  Yet there are a lot of stock market bears trying to short this market.  Look, I'd like to be bearish too, based upon the dismal economic fundamentals.  Unfortunately in this case, you can't fight the Fed.

~ Fred Hickey, The High-Tech Strategist, November 6, 2011