George Soros, one of the most successful investors of all time, just came out of retirement to bet against the U.S. stock market. Carl Icahn is 150% net short. Stanley Druckenmiller is in the same boat. Yikes, you wouldn’t want to be on the other side from one of these guys, let alone all three of them.
There are people who get influenced when they see stuff like this and I can understand why. I have dedicated the last ten years of my life to learning about the market and am fully convinced that nobody can see the future. Yet even equipped with this knowledge, I sometimes can’t help but feel worried when I read about successful investors turning bearish. I mean, these guys are all-time greats, who am I to take the other side? But then I shake it off, reminding myself that their opinions have absolutely no place in an investment process. Here’s why…
1) Losing money means literally nothing to them. They can drop $10,000,000 on a trade and not even notice it’s missing.
2) These guys are traders, they’re not married to their opinion. They can change their mind tomorrow and you’d never know it.
3) The best batting average of all time is .440. The greatest investors have a similar winning percentage.
It may turn out that these guys provided a great public service, warning all of us about an imminent stock market decline before it happens. And I’m definitely not saying these guys being bearish is bullish. That’s silly. But the real time to worry is when everyone sees clear skies ahead because there are no divergences at the top.