Another prominent bear throws in the towel. Last week, hedge fund manager Hugh Hendry said the following:
I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out,
I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years’ time.
I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.
I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year.
Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.
Whether Hendry is correct in his theory that there is a disconnect between the fundamentals and the technicals or whether he is just not looking at the right fundamentals is up for debate. Pragmatists, like us, are more comfortable simply following the trends.
HT: The Reformed Broker and Abnormal Returns
