A chart made the rounds last week that purported to prove Nouriel Roubini and David Rosenberg are excellent contrary indicators as relates to the stock market.  The chart was simply the S&P500 annotated with alleged market commentary by the pair — bearish at the lows, bullish at the highs.  It eventually made its way over to the estimable Doug Kass, who posted it.  (Mr. Kass had no part in the chart’s creation, and this is not a quibble with his decision to post it. Further, I’m a big fan of his contrarian style.)

The truth — at least as it relates to Rosie — tells a bit of a different story.  In March of 2009 — on the 4th, to be precise — Dave was “looking for reasons to turn bullish” and “believe[d] the stage [was] being set for sentiment to become completely washed out, which is what it takes for contrarians to become constructive.”

Below is a page from his report that day (highlights were made by me three years ago and not for this post):

David Rosenberg Looking to Turn Bullish (March 2009)

Now, we can argue about whether or not Dave ever really found the reasons he was looking for, or made the “turn” of which he wrote, but for the chart-maker to suggest he was bearish at the March 2009 low is simply untrue.

For transparency’s sake, I’ll note that Rosie is a good friend.  I do not know Prof. Roubini.

Category: Really, really bad calls, Research

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Setting the Record Straight”

  1. Futuredome says:

    The market is due for a correction, probably triggered by Greece default.

  2. for me, it’s enough to understand that Rosenberg is a sound Thinker.

    those looking to discredit the body of his Work should be understood to be ‘one of those that you cannot understand’..

  3. JasRas says:

    Rosie is easily painted as a “bear” in the eyes of the media. He was painted as leaning the wrong way due to the negative tone of his reports in 2009 as the recovery was showing to be less than vigorous. Yet, he was very right on his calls that year (would’ve done better than just piling into stocks…) just wasn’t that enamored with stocks.

    I wouldn’t label him as a bear, but as a person with unmet expectations and a realistic outlook. His ideas are big and are on a longer cycle than most investors tolerate. His thoughts are additive to anyone’s decisions.

    I have no feel for Roubini… I am suspicious of information from he or his organization as his reputation seems to taint him for me. He may be extremely intelligent and accurate, but I can only follow so many…

    I think there are reasons to be bullish…too many investing their politics…failure to recognize that fixed income spreads are much better than several months ago… TED, Libor, Euribor, most euro-sovereign to Germany, etc are all tightening, not widening. Pervasive concern over economic slowdown in U.S.–ie. not a surprise. Pervasive concern about earnings quality—(without considering how the crazy FX mkts may have affected 4qtr for many…I think the Euro started 4Q11 at 1.40 and went to 1.25 during the quarter, then ended around 1.30? Not looking at a chart, so these are “around/about” numbers. But basically, a superball, is the apt descriptive)…

    Finally, tone has changed from “what if it collapses” to “what if it doesn’t”….this is a huge deal. We don’t need great. We just need more of the same plodding forward without massive blowups. Think about last year and how horribly disruptive the events were not only to the markets, but to life in general on this earth. And that was the follow-up year to 201o when we tried to kill the ocean with oil… Now, imagine if this happens to be a generally boring year… the stock market could be up huge! So I’m voting for boring. Because everyone has been conditioned to expect disruptive and horrible. Ask yourself. “what if NOTHING of note happens?” I’ll drink to that.

  4. Winston Munn says:

    Speaking of “Setting the record straight”, Rick Santorum has straightened us all out on the cause of the Great Recession – oil prices.

    “We went into a recession in 2008. People forget why. They thought it was a housing bubble. The housing bubble was caused because of a dramatic spike in energy prices that caused the housing bubble to burst,” Santorum told the audience. “People had to pay so much money to air condition and heat their homes or pay for gasoline that they couldn’t pay their mortgage.”

    Or, as Mel Brooks might have said, “People had to pay so much money to air condition and heat their homes or pay for gasonline that they couldn’t pay their phony-baloney mortgages.”

  5. merily says:

    Ah. It was the air conditioning that made the bubble. Love it.

  6. merily says:

    There’s one more thing to remember though. I haven’t seen the chart you’re referring to, but I was reading Rosenberg daily at the time. For months after the bottom, about once a month he’d say the little rally was over – a dead cat bounce.

  7. JasRas says:

    Merily, perhaps that was perception, but it wasn’t actual. Still got all the reports…don’t think he called the end of any rally. I think he knit-picked and brought down to earth a lot of the “green shoot” drivel that was all over the media. I think he had a target number that wasn’t hit until fall of ’09 and blew through. I think he suggested better choices than stocks throughout the timeframe—and was right, by the way…

  8. kenny powers says:

    Rosie was bullish on gold and bonds in 2011. That was a really, really good call. Hate all you want, wall street permabulls.

  9. cognos says:

    JasRas – you are dead wrong. I am with merrily.

    Rosie has been anti stocks the entire rally. He’s been VERY bearish. Called for “double dip” entire 2nd half of 2009 (and basically since).

    That said, Rosie has been one of the relatively few bears who was very pro-USTs. So he’s made decent money despite being bearish. Compare this with the more typical — “anti USTs”, “hyper inflation”, “muni defaults” bears of whom there are so many. They are the real broken clocks. Have cost clients dearly.

    So, net-net… he’s missed a lot in stocks. But made decent small money hiding out in USTs. That he’s turning bullish now, at the beginning of the mid-recovery, could save him.