財經觀察 1651 --- A Bear Closes His Short Fund

A Bear Closes His Short Fund

I had a long conversation with Bill Fleckenstein today. Bill runs a short-only hedge fund and has done so for many years. He is one of the more outspoken and well-known bears. And he told me that he is closing his short fund. Shutting it down and sending all the money back.

"Right now, my list of stocks that I want to be long is longer than the list I want to short." In the current environment he wants the ability to go long as well as short. For those of you who are long the market, that is probably as good an indicator as any that we are closer to the bottom than we are from the future top!

Interestingly, we agreed on a possible scenario for the first half of the year. We both see a very tradable rally going into spring. Then, when we get even more earnings disappointments at the end of the first quarter and warnings at the end of the second quarter, we could see another test of the November 20 lows. Earnings disappointments are the catalyst for protracted bear markets. But the wild card is the coming economic stimulus package. We have never been in a situation like this.

While I am negative on the stock market (and markets around the world) in general, there are some stocks which are now at reasonable values. When you can find a stock with a P/E ratio lower than its dividend, and with that dividend reasonably well protected, I can't argue with a long-term investor buying that stock. 6% dividends can cover a lot of market sins at these levels. (Don't ask for stock recommendations: I don't analyze stocks. My business is analyzing the economy and money managers. A man has to know his limitations.)

The market seems to be thinking the economy will be coming out of recession in the third quarter of 2009, hence the rally. I think that is optimistic. As the research above suggests, this could be a longer and deeper recession than anyone younger than 50 can possibly remember.

Next week, we will get into the actual forecast for 2009.