"And another one gone, and another one gone, another one bites the dust." -- Queen
NEW YORK (
) -- I don't know if you've heard, but there's a new saying going around Wall Street: "Bulls make money, bullish pigs make more money and bears get slaughtered."
This year, 2013, continues to be the year of the bear killer. One by one, we have seen a number of prominent bears throw in the towel. With nearly a straight up advance this year, the career risk of remaining bearish at this point is simply too high a price for most to pay.
The latest victim was Hugh Hendry of Eclectica, who turned bullish last week while acknowledging that after a 30% advance in the
Russell 2000 ETF
up even stronger over the past year he might be "providing a public utility as the last bear to capitulate." He went on to say that he can no longer "look himself in the mirror" as he has had to reject "everything [he] has believed in."
Earlier this year, Richard Russell came to a similar conclusion, saying that while he knows "there are risks in buying an uncorrected advance that is becoming uncomfortably long in the tooth, [his] suggestion is that [his] subscribers should take a chance (after all, Columbus took a chance)."
We have also seen David Rosenberg of Gluskin Sheff, one of the more bearish economists over the past few years, turn bullish on the U.S. economy and equities. Rosenberg acknowledged in a recent interview that they have been "raising their equity weightings alongside" his view that "recession risk over time is coming down."
Even the valuation bears such as Jeremy Grantham (of GMO) and John Hussman (of Hussman Funds) seem to be calling for higher equity prices before an eventual decline. While Grantham is predicting negative real returns for U.S. equities over the next seven years, in his most recent letter he stated that his "personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year."
In a similar vein, John Hussman, who remains quite bearish on equities longer-term, recently purchased out-the-money call options in his fund to protect against a "further speculative blow-off in the shorter term."