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This blog post originally appeared on RealMoney Silver on May 31 at 7:27 a.m. EDT.

What the Bulls Got Wrong

The bulls missed the following:

  • the persistent drop in home prices and housing turnover, despite a near-record low yield on fixed-rate mortgages, as an expanding shadow inventory of unsold homes weighed on the housing market;
  • a far weaker-than-expected jobs market;
  • an uneven domestic economic recovery (dependent on a lifeline of fiscal and monetary support);
  • a broadening eurozone sovereign debt contagion; and
  • the expectation that constructive action would be made on reducing the burgeoning U.S. deficit.

What the Bears Got Wrong

The bears missed the following:

  • the magnitude of the liquidity commitment toward quantitative easing (QE2);
  • the general indifference of the fixed-income market with regard to rising inflationary pressures;
  • the Fed's market-friendly zero-interest-rate policy was maintained throughout the period (and shows no sign of being abandoned); and
  • the sustainability of corporate profit margins and profits.

Doug Kass writes daily for

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At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.