The headlines don’t reflect it yet but according to Brad Lamensdorf a 10 to 20% correction isn’t just possible, but has actually already started. In the attached clip the manager of the Ranger Equity Bear Fund ETF (HDGE) says he’s seeing some key breakdowns that don’t bode well for the tape as a whole in the coming months.
Like many of the bearishly inclined investment class Lamensdorf is concerned about how far the market has come without any meaningful pullback. He takes it beyond a hunch when he points out some of the flaws in the bullish argument that the public isn’t taking part in this widely despised rally yet.
Professional sentiment in the form of research from Institutional Investors is of course widely bullish. At this point the fund managers who’ve been sitting in cash for the last couple years are either out of business or simply long out of necessity. Being long defensive sectors is about as close to bearish as many are willing to get.
Lamensdorf also makes the case that individuals are much more invested in this market than people claim. “Money markets relative to stock funds is at a very low level,” he claims. “Over the last five years a lot of money has moved into ETFs as opposed to individual stocks. Net wealth in the stock market relative to overall assets is actually at a brand new high. Over 2000 and over 2007,” he notes.
Apple (AAPL) is near all-time highs and Facebook (FB) is breaking out but Lamensdorf points to stocks like Boeing (BA), United Technologies (UTX) and McDonald’s (MCD) as major names that aren’t just breaking down but falling below key technical support. How does it end? In tears and throngs of pundits on financial television as he sees it.
“A lot of correcting is starting. It’s just a matter of what it’s going to take to get everybody scared enough to form a bottom."