Brazen Bullishness; ECB Is Behind the Curve: Best of Kass

NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Last week, Kass wrote about a strategist who can't say "I don't know" and about Europe's economic condition.

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Barry Bannister's Brazen Bullishness

Originally published on Friday, Aug. 22, at 2:13 p.m. EDT

Stifel Nicolaus strategist Barry Bannister appeared on CNBC's Fast Money: Halftime Report today.

To begin with, it is great that CNBC had someone like Bannister on -- as talking heads who have been wrong are entitled to present their views. After all, if the business media only had those that were correct in view on their broadcasts, they would have had no available guests from 2008-2010 (during the Great Recession)!

Apparently, Bannister has raised his 12-month S&P 500 price target from the lowest on the Street to the highest, an increase of 450 S&P points in his forecast, from 1850 to 2300.

Bannister was, not surprisingly, self-confident in view.

Never did I hear the words "I was wrong" or "I don't know."

I don't even know what to say.

Well, maybe I do know what to write.

As a generalization, stay away from the self-confident talking heads who display little rigor and whose knowledge base is 3 miles long and an inch deep. They are often wrong but never in doubt.

Never rely on talking heads to determine your strategy and individual stock selections, and that includes me and Jim "El Capitan" Cramer. Always do your own homework. Get advice from multiple channels, and always consider always your risk profile and time frames.

There is no secret sauce, and there are no fractals that have the answer to the market's riddle.

Answers are garnered through hard-hitting research, analysis and logic of argument. And even when the analysis is well done, the timing may be off. This especially applies to the contrarian who can suffer from shortsightedness or farsightedness.

Trend-bucking can be highly profitable but involves much risk, as the crowd usually outsmarts the remnants -- except at inflation points.

Mr. Market humbles the best of us.

 

  • When I am wrong, I try to say/write that I have been wrong (as I have been on my market call this year).
  • When I don't know, I say it.
  • I have learned to never be self-confident in view and to worry about what or who lies over my shoulder (especially of a Cossack kind!)

 

As Grandma Koufax used to say, "Dougie, honesty is the best [insurance] policy."

Let's go to the tape!

ECB Is Behind the Curve
Originally published on Friday, Aug. 22, at 12:24 p.m. EDT

Now all eyes are on European Central Bank President Mario Draghi.

The August composite purchasing managers' index for the EU was quite weak. In all likelihood, Europe's real GDP will show no growth in second-quarter 2014, and growth is likely to be under 1% in the current quarter.

The ECB has accomplished a monumental drop in sovereign debt yields through jawboning, but it is clearly behind the curve and should have already introduced quantitative easing.

The problem, as I see it, is that Europe's economic woes are both cyclical and secular.

What has been surprising to me is that as nearly 20% of the S&P 500's profits are dependent on Europe's economic condition, the U.S. stock market has been unaffected by lagging ECB policy and weakening macroeconomic data in the EU.

Indeed, the relative strength in the U.S. economy has attracted global investors to our market, seeing the U.S. markets as something of a safe haven, as money has outflowed from Europe.

A strong U.S. market benefiting from a weak Europe is something to be worried about, as it is a weak foundation for strength in equities.

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.

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