I was going to write a long point-by-point rebuttal to a Zero Hedge post about David Rosenberg that is factually erroneous, biased, defamatory and just plain wrong; instead, I will offer my correction.

Before proceeding further, my disclosure: I have known Rosenberg personally for a decade or so, and professionally for much longer. I consider Rosie a close friend. He presented at our annual Big Picture Conference last October 2012. We frequently disagree on economics, politics and markets; we rarely disagree about wine.

I am also familiar with his current contract. Rosenberg’s deal is detailed in Gluskin Sheff‘s regulatory filings. Its no secret that he makes a lot of money — about $3m per year. That is the going rate for a strategist/economist of his stature. He was Merrill’s Lynch‘s grand poobah for almost a decade, ends up on all sorts of lists of most influential Canadians, etc. That Gluskin Sheff was on anyone’s takeover radar is due in no small part to Rosenberg dramatically raising the firm’s profile (They ended up selling a big chunk of the firm). Regardless, Rosie get paid market value for what he does; (its no secret amongst strategists that Gluskin matched another offer from a competitor).

What the Globe and Mail got wrong, and what ZH then completely distorted, was the basis of that package. Breakfast with Dave, the daily research product Rosenberg puts out, has nearly 3000 subscribers paying $1,000 per year. That alone allows the company to pay Rosenberg’s cost. Sweet deal? The Globe and Mail got it ass backwards –  Gluskin Sheff is the one with the absurdly sweet deal. Rosenberg costs GS almost nothing. His pay is generated by his own work product, even if it isn’t structured that way formally. GS then flies him all over North America and the rest of the world meeting institutional and retail clients. A top economist for essentially free is a damned good deal. (GS: Let me know if I can take him off of your hands)

As to Zero Hedge’s error — his more or less $3M deal has been in place since July 2011. He gets paid the same whether he is bullish or bearish. The actual subscription info to Breakfast with Dave suggests that clients have been paying for his bearish perspectives.  As the Wall Street Journal detailed earlier this year, clients actually turned on Rosie for flipping bullish, cancelling subscriptions. The change is posture — first telegraphed in mid 2012 — has not earned him any money, and probably cost him some.

But to me, the most revealing aspect of Zero Hedge’s hit piece is the opening sentence: “In early 2013, many were mystified when one of the most vocal deflationists, and hence stock market bears, David Rosenberg, turned furiously bullish.”

Except anyone who pays attention to equity prices — they were not mystified: Year to date, the S&P500 is up more than 25% and the Nasdaq is up more than 30%. What is mysterious is that no actual market performance so much as enters the discussion. The most revealing thing I can write about the piece is that nowhere does Zero Hedge bother to admit that Rosenberg’s call was 1) Correct and 2) Made money for clients.

How can you make a big deal over a change in market posture but omit that its been right?

When your biases are such that it is unimaginable that anyone could legitimately change their views on the markets, you have cognitive issues that will hurt your ability to navigate markets. But when that hubris leads you to conclude someone disagreeing with your market posture is only due to a monetary payoff, that is cognitive dissonance writ large.

Zero Hedge owes David Rosenberg an apology.

Category: Really, really bad calls

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.

33 Responses to “No, David Rosenberg’s Bullishness Was Not “Purchased for $3M””

  1. Invictus says:

    It should also be noted that ZH had no problem citing Rosie and his work literally dozens (hundreds?) of times when it bolstered their apocalyptic view of the world. Now that he’s assessed the landscape and adjusted his outlook, they have no use for him, assume he must be bought, and unceremoniously throw him under the bus. Such behavior tells you all you need to know about ZH.

  2. Liquidity Trader says:

    Zero Hedge has been on the wrong side of the market nearly this entire rally. The commenters are lunatics, they indulge in every hairbrained conspiracy theory there is.

    I stopped reading ZH 3 years ago — you should too.

  3. Black Friday says:

    I usually lurk here, disagreeing with nearly everything you say, but never commenting. I had to register to tell you that for once, we completely are in agreement. There is no money to be made reading Zero Hedge.

  4. I like ZH for his take on Derivatives, Structured finance and Goldman Sachs.

    The rest of it is filler

  5. Moss says:

    ZH will lambaste anyone for ‘going along’, they are strictly anti-establishment, anti-fiat, always bearish, pro Gold. They are consistent that is for sure.

  6. amnfg says:

    More importantly than blasting people for mkt views, ZH uses it’s pages to raise web hits via anti semitic innuendo. The commentary is disgusting. Other than that, its a fine website.

  7. gloeschi says:

    Sorry, but if you go to ZH for investment advice you can’t be helped. Tyler is the fastest, most sharp-witted and funniest guy on Twitter. Instantly disarming BS with humor, all within 140 characters. How’s Fusion IQ’s performance this year, btw?

    • Before I left in September, it had been outstanding. Havent seen the latest data, but its likely similar.

      A joint project with a big firm is putting up market beating numbers (Note: These are unaudited, and are a small test run for a year. I’ll let you know how it goes once we have a longer timeline and more assets under test)

  8. jp1776 says:

    I’m sure David Rosenberg deserves his salary. But why would anyone listen to him? After being bearish for years, he suddenly turns bullish and that means anything? E.g. in September 2010 he said the market is overbought and all signals are negative. The Dow was at 10,860. Now that he turns bullish is that a contrarian signal or no signal at all?


    BR: You seem to be missing the underlying point of this post — Zero Hedge posted that the reason Rosenberg flipped bullish was he was paid to.

    As to why would you listen to him, go read the WSJ article referenced above

    • jp1776 says:

      I wasn’t missing the point. I was addressing a broader point. I have learned (thanks in part to you) not to listen to market gurus.

  9. Arturo says:

    Cue the ZH crazies, they will be here any minute!

  10. Rick W. says:

    As LT subscriber totally agree. Extreme to say DR turned bullish just bond bearish and more positive on Econ

  11. @ritholtz disembowels @zerohedge on the topic of David Rosenberg

    via @edwardnh

  12. Well done and 100% correct. Any of us in publishing would take GS’s deal w/ Rosie.

  13. 1-he’s worth it and 2-folks should worry more about their own pay than someone else’s. Waste of time

  14. scone says:

    I like reading Rosie’s stuff, he’s a clear thinker. And I’m always happy to take money from the ZH nutters. A reliable contrary indicator?

  15. mpetrosian says:

    I’m not really sure how he was ever labeled bearish anyway. Dave has a list of current investment themes at the end of each report that for years has been littered with wonderful ideas.

    After QE got going, it really bothered him and he focused more on what should happen rather than what was going to happen and should have pushed equities a little more, but the bottom line is you made money following his strategies. More importantly, he’s got the balls to admit when he’s wrong and is always questioning himself.

    When I was a trainee at Merrill in 2005 with no AUM and still studying for my 66, me and a room full of young guys called him randomly in NY. He took our call and stayed with us for 30 minutes answering questions and dropping kernels of wisdom.

    Thank you Mr. Rosenberg for your hard work and integrity, you deserve every penny. Respect.

  16. VennData says:

    Zpeculative fiHction

  17. NY Observer says:

    The Dow Zero Insurgency:

    In a sign of just how radically the order has shifted in the political and media world, neither the Times nor Schumer had a clue about the identity of the pseudonymous author behind Zero Hedge. As it happens, the founder, Dan Ivandjiiski, is a 30-year-old Bulgarian immigrant banned from working in the brokerage business for insider trading

    ’nuff said

  18. LeftCoastIndependent says:

    I read a lot of the blogs out there, including ZH. It’s good to get The Real Big Picture on investing and the economy. There is a lot of scary stuff going on, Central Bank intervention, Japans debt to GDP ratio of 200+ %, Manipulated gold prices, Bitcoin craze, and on and on. None of this info is on MSM. To do the fat, dumb and happy method of investing is asking for trouble. Got to watch it like a hawk, and get as much education as possible. One of these days, Tyler Durden is going to be right.

  19. A. Cy Lum says:

    ZH matters somewhat when markets go up.
    ZH matters somewhat more when markets go down.

    Besides, or in aid of the “We All Gonna Die” orthodoxy it offers some early news, interesting research by big houses and, if one’s mood aligns, entertainment, eg. Zombie apocalypse.

    Concerning this kerfuffle Mr. Rosenberg was, prior to changing his call earlier this year, wrong. Now he is right. One day, for whatever reason, he will be wrong again. Either way his call will be well argued, including eye-catching charts.

    As for his remuneration being linked to changing his call: rubbish. Ultimately the market — his subscribers — will ascribe a value to his prognostications. To his credit he changed a call he was deeply (dogmatically(?)) tied to. He was also late.

    As for ZH it still has Faber, Schiff, et al. to carry their banner forward; which will at times be right, and other times wrong.

    In summary:

    1. No one can foretell anything.
    2. If one can, it’s best to read and seriously ponder both sides of a topic.
    3. It’s not about sticking to a call, it’s about making money.

    A. Cy Lum

    PS For a refreshing of my own call’s merits I will now listen to Don Ho;s classic, “Tiny Bubbles:”


    While pondering the award winning qualities of this Zombie-proof house:


    … thereby keeping my internal dialectic market call stoked and balanced.

  20. karakelian says:

    BR: I agree that the ZH post was as useless as most of their commentary. But I don’t believe you are correct insofar as the market rally this year vindicating Rosie’s new bullish stance. I had been a subscriber to Breakfast with Dave for three years up until August of this year. Up until then and I believe even now Rosie was and is BEARISH on stocks! Yes, he turned bullish on the economy, but retained his pessimism towards equities. Hence, I don’t see how you can cite the rally in US stocks as having justified his bullish stance at all. I dropped my subscription because I had concluded that his negativity on economy and more so on stock markets was costing me a lot more than the $1000 annual subscription. I hope I’m wrong, but I suspect Rosie will join the long list of strategists who made one spectacular call (the housing bubble) only to fade into average.

    • I did not say he was vindicated going from 35% to 50% equity exposure, I noted it was “mysterious that no actual market performance so much as enters the discussion.”

      I thought it was telling that ZH failed to so much as mention the markets, or that they themselves have been wrong on equities for 4 years

    • slytherin says:

      When you are in the business of selling stocks, you want to hear a lot of rah rah about the stock market, Jack. How else are you going to sell the stuff to your clients? I hope Santa brings you lots of good cheer.

  21. mpetrosian says:

    Dude, Rosenberg was making market calls way earlier than 2008. He’s hit the bulls eye a few times. And he never said don’t buy equities. And look at all the calls he has nailed since 2008. Gotta look at the whole package.

  22. [...] becoming uncomfortable to watch. Their intellectual leaders are abandoning the cause or, worse, switching sides. None of their formulas or equations are working, they’re just losing more people more money [...]