The eternal masochist, I turned on CNBC yesterday morning while I was having breakfast. I usually watch the crawl and try to tune out the talking head chatter. This time, though, I listened to an interview with Jim Paulsen, a veteran market strategist now at the Leuthold Group.
Paulsen, whose work I’ve known for many years, is, a lot like me, typically bullish, so arguably his real information value comes during the infrequent times he’s bearish. Yesterday wasn’t one of the latter times. Still, I found the interview interesting. My takeaways:
–his view is that many retail investors are still bearish and have lots of money on the sidelines, something that will lend continuing strength to the market as these funds are gradually reinvested
–the big reason to be bullish is that things are so bad now that there’s lots of good stuff that could conceivably happen
–the CNBC resident “strategist” opined that today’s stock market is risky because it is being driven higher mostly by the FAANGs, a small number of mega-cap growth names. Therefore, if any of them falter, the market could drop a lot. This is about as factually incorrect as one can get (what a surprise). Paulsen pointed out in as polite a way as he could that since the bottom in March a whole diverse group of indices–growth, value, small cap, large cap–have made 50%+ gains. More informed questions might have been about valuations, or about the runaway gains made by mid-sized tech names, or about signs of a possible market leadership shift from tech to consumer discretionary
(There are very substantial performance differences between growth (good) and value (pretty awful) over the past 12 months and year-to-date. But not since March 23rd, which five minutes looking at the S&P website would confirm)
–no thoughts about the decline of the dollar or the significance of the upcoming election. These are important stock market issues, particularly as US government indebtedness threatens to put us in Italy/Greece/Lebanon territory (thanks, ironically, to a Republican administration that led off with a budget-breaking tax cut). Given that the customer base is likely right of center, however, no one sees any percentage in pursuing this topic