Posted by: Ben Steverman on April 24, 2008
Whenever the stock market looks shaky, the “perma-bears” come out of hiding.
These are the permanently, professionally skeptical investors or market strategists who can always be relied upon for a gloomy take on the stock market and the economy.
The obvious problem with these perma-bears? They’re way too consistent. Like a stopped clock, they’re inevitably right some of the time. But, because most of the time stocks move higher, they’re mostly wrong.
I recently interviewed retired Merrill Lynch analyst Stephen McClellan and wrote an article on his new book, “Full of Bull: Do What Wall Street Does, Not What it Says, To Make Money in the Market.” The book describes many of Wall Street’s biases and blind spots, which put individual investors at a disadvantage.
One of Wall Street’s big conflicts of interest, McClellan says: It has a huge incentive to be optimistic. Investment houses only makes money when people invest, so Wall Street tries hard not to scare off paying customers with doom and gloom.
He has a point, and that makes me more grateful for the few perma-bears that are around. Maybe we need more of them.