Saturday, September 20, 2014

Bill Fleckenstein Brought Out To The Firing Range On CNBC

The market continuously moves through a steady psychological cycle of human emotion. During the depression stage of a market decline no one wants to admit they own the asset, and they can only discuss the potential risks of the market moving lower. This is the absolute best time to begin accumulating a position within that asset class (examples in today's markets would be precious metals, agricultural grains, uranium stocks and the Russian ruble).



As prices rise and investors gain confidence psychology slowly shifts until it reaches the complete opposite end of the spectrum. During this period, usually between thrill and euphoria, the fear that prices could potentially move lower is completely washed away.

We are at this psychological point for U.S. stocks. At this stage the mainstream media likes to lump together a group of talking heads like a firing range to verbally assault anyone left on the planet who could potentially even think about not having their clients "all-in" U.S. stocks at current nose bleed price levels.

This week CNBC brought on Bill Fleckenstein who created a short fund at the peak of the stock market back in 2007 (a short fund profits when prices fall). He closed his short fund in February 2009 (the market bottom) because he felt central banks would print an enormous amount of money and stocks would experience a relief rally.

This would probably be the closest example available of an analyst who has a complete understanding of monetary policy and its impact on the financial markets, however, the CNBC host tells Fleckenstein he misunderstands monetary policy, at which he can only laugh.

The remaining portion of the segment consists of the three U.S. stock bulls assaulting Fleckenstein relentlessly for not currently being 100% long U.S. stocks. Fleckenstein is currently in the early stages of opening a new short fund to capitalize on the U.S. stock market's next collapse, just as he did back in 2007.

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