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The Other Side of Richard Russell


Even seasoned Wall Street vets sometimes need to see the other side.


I scribed a tongue-in-cheek missive this morning offering 35 reasons why, while we've seen a noice, tradable low, THE bottom likely hasn't been seen. This (and every Wednesday's) column is syndicated to our friends at MarketWatch, which allows us to track the performance with the little box on the right.

I typically shoot for top honors-sometimes successfully, other times needing corks for my forks, all with the understanding that the fatal flaw of a classic over-achiever is to continually reset goals-and found it interesting that this particular morning, only one article is trumping my vibe, both on most read and most emailed.

The title? "Richard Russell is forecasting an epic bull market for stocks." Among the assertions is that the 2000-2002 bear market never happened and the 2007-2008 bear market was a figment of your imagination. I draw this perspective to your attention for one reason, to paint both sides of the fence for those who might be sitting on it.

Mr. Russell notes two reasons why he had such a dramatic change of heart. First, the market has been building a huge base since the early 80's (with mere hiccups in 2000-2002 and 2007-2008). Second, during those burps, stocks were nowhere close to the cheap levels that historically mark bottoms.

Given those factors, he sees "no other explanation" for what's going on. I would humbly offer that the answer can been seen through two lenses. The anatomy of this recession and the financial engineering that crafted it. He's a lot smarter, a ton wiser and way more seasoned that I am. I'm simply trying to offer the frisky fella a little perspective as unique times defined the climbs.

There's always a bull market and always a bear market. The residual grist is what dictates price, which is the ultimate arbiter of variant opinions. A confluence of dynamics dictate the action and we've tried to talk through those in kind.

As it stands, with all due respect to fundamentals, technical, structural and psychological metrics, we've arrived at a massive game of chicken.

Structural imbalances on one side. Socialization (the Fed on the other). Welcome my friends. Welcome to the machine.


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