Losing Graciously

By -

There's a very well-known publisher of market commentary which – like me – has been largely bearish over the past two and a half years. What is irksome to me is that, in the face of a market which has done little but push higher all this time, they keep pointing to a chart showing that in "real dollars" (in their view, gold) the market has indeed been crashing.

Ummm, that's stupid. Gold is an asset, but it isn't used as money in our society. Do you buy groceries with it? Pay your mortgage with it? Pay school tuition with it? I didn't think so.

I could make ANY prediction about ANY market and be correct if you allowed me to choose some kind of "currency" as a benchmark. Over any span of time, you can find something which has gone either up or down in value to support your claim, if that's what you're allowed to use as your divisor.

Let's try this. I've been bearish on the market, as you know. Let's say that the shares of Apple, Inc. are the most meaningful form of "real money." How have I done? Looking at the chart below, I'd say I've been spot-on.


I realize there's a difference between Apple and gold, but not much. 99.9% of our transactions are done within the borders of the United States, using U.S. currency, so the nominal value of the stock market, measured in dollars, is the most accurate judge of how predictions have panned out. I've been, by and large, bearish. I've been wrong. I'm not going to completely lame-out on you and divide the stock market by the value of gold, for God's sake.


I lean bearish. It's my personality. To some, I looked like a genius in 2008 and early 2009. I wasn't. To some, I look like an idiot for my bearishness recently. I'm not. I'm neither an idiot nor a genius. I'm a very good chartist, and I've offered plenty of great trading ideas (and plenty of not-so-great ones), and my bearishness has been wrong for longer than I care to remember.

But at least I am man enough to say that without gimmicks. Sheesh.