I Agree with Barry Ritholtz

By Chip Hanlon | October 15, 2008 | 2:16 PM | 5 Comments

Barry Ritholtz is so interesting because, on the one hand, he posts comments like this in the morning: Analysts Forecasts Remain Too High

...then goes on CNBC within hours and tells how he is bullish enough to be buying leveraged, long market ETFs like the Proshares Ultra QQQs (NYSE: QLD).

I agree; analysts' forecasts for 2009 are clearly still too high, yet the market is probably a buy right this minute. His thesis was simple: as bearish as he is, he also thinks that if you consider yourself courageous enough to do what most only dream of doing--buying into deep market declines--then you have to be nibbling on the market here. He cited one technical measure which suggested the market has only been this oversold 3 other times: after the crashes of 1929, 1973 and 2000.

It must be noted that in none of those cases did a lasting bull market begin, but there were certainly very profitable long-side trades available.

I nibbled a bit at Friday's open, personally, on the same types of broad ETFs he was talking about. I am staring at this market today and strongly suspect I'll nibble a bit more before the close. Risk-tolerant investors can, too, with stops... it's a reasonable speculation.

And it has to be considered interesting that person who has been correctly bearish (and still seems to be, fundamentally) is saying "buy."

If CNBC puts those segments on its site I'll update here with links to those because Ritholtz's comments are worth seeing.

**UPDATE (2:29pm EDT): ok, here's the first segment: http://www.cnbc.com/id/15840232?video=891219594&play=1

...there was one more short segment he was in after this one in which he made interesting remarks, as well...if it shows up on their site I'll link to that one here, too.

**UPDATE #2 (1:28pm EDT on 10/16). Finally back with the other segment...here it is:

http://www.cnbc.com/id/15840232?video=891200731

 

Buying here ? Many people try to be contrarians, very few accomplish it. It is easier to step and take a chance here if you have been bearish for over a year -- like Dennis Kneal said Ritholtz was. Anyone short for most of 2008, and then buying in October has to be considered a contrarian. Most people dont have the discipline or the confidence in their methodology to do that Its a tough trade, but it looks like a smart one. Submitted by Anonymous (not verified) on Thu, 2008/10/16 - 7:00am » reply |

Okay 'nibbling' is an Okay 'nibbling' is an adjective I am accustomed to with investing :) Beside that, are you are 'nibbling'from a long term or short term perspective? Submitted by Jim Farrish on Wed, 2008/10/15 - 2:30pm » reply |

Completely Agree Just thinking the same thing. Not quite bullish enough to be buying the 2x's bullish ETFs however. We may get a pop in the Russell if there is evidence enough that the banks will become more willing to lend to mid-size companies. Time will tell but we certainly are backing and filling the 900+ point gap up we set on Friday. Seems a bit overdone on the short-term. Submitted by Jim Slagle on Wed, 2008/10/15 - 2:20pm » reply |

Barry is amazing. Most Barry is amazing. Most people could not get away with that because they simply would not be able to explain themselves well enough. They would look like flip floppers. H can and does and is credible in doing so. Good post. please post videos when they are up. Submitted by Aardvark on Wed, 2008/10/15 - 2:19pm » reply |