Bears Still Lurk

This column by Doug Kass was originally published on Feb. 2 at 8:08 a.m. EST on Street Insight. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

This week, the market has advanced into record territory as market participants' enthusiasm over a noninflationary period of growing and sustained economic growth seems to have improved.

Indeed, since mid-2006, investors have been immersed and have been captivated by a world known as Cramerica, a world in which everything is coming up booyahs, as both good news and bad news are treated as good news.

According to my hedge fund contacts (an admittedly small sampling!), and despite what you may read from others, this week's ramp also resulted in the capitulation by many shorts. The short side has become, for most long/short investors, simply a hedge against profits. And in the competitive hedge fund industry's mandate to create excess returns above the market (alpha), this is rendering the appetite for hedging (read: shorting) increasingly undesirable (to put it mildly). ...