Rally Expiration Date Stamped 'Uncertain' - TheStreet

Editor's note: This column, condensed here, originally appeared May 5 on RealMoney.com. To sign up for RealMoney, where you can read Bill Fleckenstein's commentary every day, please click here for a free trial.

Of Q&A and TBA:

For folks who may not be aware, Warren Buffett held his annual

Berkshire Hathaway

(BRK.A) - Get Report

meeting over the weekend. I always like to know what he is thinking, and for anyone interested as well, please see a

fine reprise of his Q&A by


Chris Edmonds.

Turning to the Rap's own questions box, I have heard from a number of readers who want to know when the rally will end. The short answer is, I have no idea. Elaborating on that will take a bit longer. Back in my

column on Feb. 12, I opined that if prices were right, I would be wildly bullish. I thought that a lot of people were very bearish for what I considered to be the "wrong reasons." Folks were buying duct tape, as they feared a terrorist attack. There was a lot of angst about the war.

Nine Shelf Lives of a Sugarplum:

I felt that given the level of war angst, the relief rally and fantasy rally I anticipated could get especially pronounced. I was optimistic about a successful prosecution of the Iraq war, and that it would cause folks to become quite hopeful about the economy. The feel-good mood would be helped along by our passage from earnings season to the no-news period where we are now. (Stoking the dreams further, semiconductor companies have met their estimates. These are absurd at current price levels, but that never bothered folks hell-bent on speculation.) During this particular time in the quarter, fantasies abound about a brighter tomorrow. It's a mind-set that we saw in the bull market, and it has remained intact in the bear market as well. When corporate America is not fessing up, there is nothing to stop those sugarplums from dancing in people's heads.

So, I wanted to give the market rally plenty of rope, and not be too hasty about trying to fight the crowd. My plan had been to sell a "failing rally." Whether I will get the chance to do that, or whether I will have to change my mind, I don't know. Trying to make a stab at market direction is pure guesswork. But I have learned over the years that when operating on the short side, one must be very careful when choosing to get short. Even during this bear market, it's been difficult to get folks to focus on reality, since the bias toward fantasy has prevailed.

In Lieu of Prescience, Patience:

As I have thought about all of this, it's occurred to me that we


see one of the best bear market rallies of the entire bear market in this period. That doesn't mean we


. For all I know, the bear market rally could have ended today. It is not possible to know the outcome of this evolving process. I just hope I'm fortunate enough to recognize the end of the rally when it occurs.

I have not bought any stocks except for a brief period around March 13, because in the aggregate, I find stock prices to be too expensive -- way too expensive. If I bought something and it went against me, I would quite likely be shaken out. I cannot buy something that I think might be worth $3 for $10, hoping to sell it for $12. So, except for the aforementioned period, I have not tried to capture this rally from the long side, preferring, instead, to wait for a chance to re-establish shorts and put positions when I think the time is right.

William Fleckenstein is the president of Fleckenstein Capital, which manages a hedge fund based in Seattle. Outside contributing columnists for TheStreet.com and RealMoney, including Mr. Fleckenstein, may, from time to time, write about securities in which they have a position. In such cases, appropriate disclosure is made. At time of publication, Fleckenstein Capital had no positions in stocks mentioned, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy, sell or hold any security. The views and opinions expressed in Mr. Fleckenstein's columns are his own and not necessarily those of TheStreet.com. While Mr. Fleckenstein cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to