Bearish Billionaires

“I’m certainly in the camp that we are not out of the woods. I think a retest of the low is very plausible…I think we’d take out the low.”

-Jeffrey Gundlach, April 27, 2020

“The risk-reward for equity is maybe as bad as I’ve seen it in my career.”

-Stanley Druckenmiller, May 13, 2020

“I would say that 99 was more overvalued, but yeah i would say it’s one of the most overvalued markets i’ve ever seen, maybe the second most overvalued”

-David Tepper, May 13, 2020

Earlier in the year as the stock market was repairing itself from the fastest bear market ever, many investors, myself included, didn’t believe that the worst was over. A dead cat bounce, as finance parlance goes, was underway.

A few weeks and months removed from the bottom, three investors with phenomenal pedigrees from three different areas of expertise, bonds, stocks, and macroeconomics, went on TV and laid out their case for why investors should prepare for lower stock prices. The opposite came true.

Let’s not waste this teachable moment.

We are reminded of a lesson over and over and over again; Forecasts about the direction of the stock market are nothing more than a prediction about the future. It really is that simple. And if you don’t believe in a psychic’s ability to see the future, then you shouldn’t believe anybody’s ability to predict the stock market.

Tepper, Druckenmiller, and Gundlach did not get to where they are by not knowing how to manage risk. I wouldn’t be surprised if they changed their mind shortly after these appearances. But “I changed my mind” does not make good headlines, “Worst risk/reward I’ve ever seen” does.

Josh and I spoke about how investors can navigate a firehose of investment commentary, and much more in our newest edition of What Are Your Thoughts?

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