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Risk Management

Permabears Vs. Permabulls

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Being a permabear is as irrational as being a permabull. Both are bias-driven emotional states of mind. The financial mainstream media created the bull versus bear narrative to “divide and conquer” the investment landscape.

I summarized the main point of my article in the introduction above. Experienced investors are neither bulls nor bears; they are investors. The interesting part is that those who frequently blast permabears in support of the passive investing thesis are permabulls. Both permabears and permabulls have been wrong.

Below are excerpts from articles I have written in the past.

The image of the patient passive investor is probably wrong. These investors are the greediest and try to squeeze every basis point of return out of the market while blaming traders, the Fed, banks, and everyone else during bear markets.

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Most stock market analysts forecast gains for the next year, especially after a profitable year. However, these forecasts are not useful, as the odds of a stock market gain in a given year are already high. Bullish forecasts are not useful for passive equity investing, which makes up more than half of the invested capital. Bearish forecasts are more useful in adjusting the weight of stocks in strategic and tactical asset allocations.

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In hindsight, long-term charts impose the illusion of passive investing. The fact is that there are lucky and unlucky passive investors.

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Passive investors in the US equity markets are the worst gamblers due to the frequent risk of uncle point in the form of large corrections.

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Permabulls mock permabears, and permabears mock permabulls, but they are both sides of the same coin in a random investing process. We know that many permabears have missed good investment opportunities or even have lost fortunes shorting the markets, but rarely is there talk about all those permabulls who have exited the market with large losses during the panic of frequent corrections.

Bulls and bears, or permabulls and permabears, are an invention of mainstream media to assist in content creation and control by division. For most investors who have simple and tested methods for timing the markets, these labels are irrelevant and noisy. Passive investors are indirectly permabulls, but permabears may be a small group that has diverse motives.

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