In a product-creating financial world paid to sell us growth and inflation narratives, sober risk-reward assessments are not well tolerated. In the past 24 years, I’ve had to be bearish more often than bullish, but it’s not my fault, in fairness. I’m a naturally optimistic person. It’s just that my entire career as a financial analyst has happened to coincide with the most egregious asset bubbles and regulatory forbearance in human history. I’ve witnessed repeatedly the real-life carnage that reckless financial management eventually inflicts on individuals and, call me hopeless, it’s not something I want to ignore.
Most so-called financial advisors only have training in product sales. That may be nice. Perhaps ignorance is bliss for some, at least until the blowups, losses and lawsuits happen. But I’m trained to measure risk-reward prospects. Done diligently that should work as a detriment to careless risk-taking. And it does. But most financial analysts also work for investment sales firms where they are paid primarily to meet sales targets, not sweat the downside.
Today, I am worried for many people who are blindly holding financial hand grenades, and I work continually to illuminate proactive steps for self-preservation and how we can prepare for the inevitable opportunities coming out of all this mess.
A recent lookback from economist David Rosenberg, just a few years my senior, reminded me of similar experiences in my own career. And at the most extremely over-valued financial conditions ever recorded, I can’t help but agree with David here, see: I haven’t been this excited about going against the herd in years:
I was being interviewed on CNBC last week when I was told that my views were diametrically opposed to the consensus and how the markets are positioned. To which I exclaimed that it’s been many years since I was this excited about going against the herd. I had just enough airtime to work in Bob Farrell’s Rule No. 9: “When all the experts and forecasts agree, something else is going to happen.”
Of course, this was all about the debate over runaway growth, inflation and the call on the United States Federal Reserve and the Treasury market. I didn’t take the bait on the stock market, as the bubble just gets bigger and bigger, with the cyclically adjusted price-to-earnings (CAPE) ratio now pressing against 37x, only surpassed historically by the late 1990s’ tech frenzy.
Yes, I am not positioned the way the dominant “Roaring Twenties” crowd is, that much is for sure. But I have been here before. When I turned bearish on tech at the height of the dotcom bubble back in 2000, my partners at the time thought I was nuts…
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