There Is No Way This Bull Market Doesn’t End Very Badly

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Bull Market End Badly, There Is No Way This Bull Market Doesn’t End Very Badly

What could go wrong?


While we remain long-biased in our equity portfolios, we are chasing performance like everyone else. As I noted in “Fully Invested Bears:”

“While the mainstream media continues to skew individual’s expectations by chastising them for “not beating the market,” which is impossible to doour job is to participate in the markets with a bias toward capital preservation. As noted, the destruction of capital during market declines has the most significant impact on long-term portfolio performance.

From that view, as a portfolio manager, the idea of ‘fully invested bears’ defines the reality of the markets we live with today. Despite the understanding that the markets are overly bullish, extended, and valued, we must stay invested or suffer potential “career risk” for underperformance. 

Such is the consequence of the Federal Reserve’s ongoing interventions. Portfolio managers must chase performance despite concerns of potential capital loss. In other words, we are all ‘fully invested bears.’ We are all quite aware this will eventually end badly. However, in the short-term, no one is willing to take the risk of being grossly underexposed to Central Bank interventions.”

While it certainly may “feel” like the market “can’t go down,” it is worth remembering the sage words of Warren Buffett.

“The market is a lot like sex, it feels best at the end.”

We remain “bullish” on the markets currently as momentum is still in play. However, we are also continually taking precautions to monitor and manage risk accordingly.

For us, that means putting a spin on Warren’s quote:

“If you engage in the market in an unprotected fashion, you may not want the unexpected surprise.”

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