There is always something worthy of note over at Daily Speculations. This week, Victor Niederhoffer makes an interesting observation on homebuilding and the wider market.
In another piece titled ‘Consumer Punks’, Vic reminds us to be aware of the chronic pessimists:
“It seems somewhat petty on my part to constantly point out the fallacies in the chronic pessimists’ (the Abelprecbuffgrosoros’) arguments. Eventually they will be right, and I have no idea if the current market is more bullish or more bearish than at any time, and I certainly don’t find this a more than usually good time to establish positions … but the point I wish to make is that there is no reason to think that the reasons for bearishness are greater today than at any other time in the last 100 years.”
“One thing that I can say for sure is that all the chronic pessimists I know of that actually trade, (in contrast to the weekly financial columnist) and who must take responsibility for their calls, are scratching the backs of solvent members from their perches and living quarters in the vicinity of the Trinity Church graveyard. Such will continue in my opinion into the indefinite future, because of the creative power of the individual when placed in a system with proper incentives and the protection of property rights.” (This refers to the long-term upward drift of the equity market).
“The question is, however, that whenever the ratio goes the other way, like P/E, now the lowest in 20 years, or oil, down 5% over the past year, or now the dollar up against the yen over the past year: why then do you never hear about the relation that was formerly bearish and is now being bullish?”
I’ve only been a watcher of the markets over the past fifteen years or so, but I agree completely with Vic’s view. During my time, regardless of the widers state of affairs, the pessimists have never struggled to concoct stories of doom.
PS – Vic’s articles from WorldlyInvestor.com (2000-2001) have been archived in pdf form and can be viewed here.