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Thursday, April 30, 2015

How to write a bearish blog post

I was over at Cam Hui's blog, wondering if he's calling for another "intermediate top" like everybody else has for the past three months, and realized that this whole blogging scene is really easy to get into, y'know?

So, to help all of you start your own blogs, here's my primer on how to write a bearish blog post:

1. Timing is everything!

First off, make sure you post bearish comments when the market has already gone down. There's no reason to freak people out when SPY's RSI is 75 or $VIX is at 12 or the market has already gone up 20% in a year; nobody will want to read it. Try to make your bearish pronouncements as soon as possible after a bullshit intraday millisecond 0.5% drop: that's the best time to get people's attention.

2. Don't be a pussy.

Nobody wants to be told that the market is just going through one of those silly 5% retraces. Everyone wants to hear about the next 20% bear market. If you're going to be a bear be a grizzly, not a teddy bear.

3. Charts charts charts!

People will take your call more seriously if you add a lot of charts. Make sure you only use the ones that look bearish: don't zoom out to a weekly candles chart that shows the entire market is still in a gentle uptrend or else your readers might clue in that this week's robopuke was just a correction back down to trend.

4. Assert the future based on the past.

Try to use as many backward-looking indicators as you can; sure they're fully priced into the market by participants who have orders of magnitude more money than you, but their infinite continuing trend forward can't have been priced in already, can it? Seriously? And always remember: the temperature in New York is -30 every day of the year, labour disputes go on forever, new houses are built at exactly the same rate year-long, and prices for gas food and US dollars are always constant.

5. Ignore the data.

For god's sake, don't talk about earnings if earnings are good. Don't talk about stock buybacks if they're happening. And for the love of all that is holy, don't mention improvement in the economy. If last quarter was bad, the next quarter must be worse because trends work that way.

6. When you won't ignore the data, do ignore what it is made of.

Ensure that the indicators that you do cherry-pick are commented on matter-of-factly without looking under the hood to see what they really are. For example, if SPY flows have diverged downward since January, but SPY has gone up during all this selling, this must mean the SPY graph has to crater 20% to catch up to the money flows line, because that's what money flows do somehow.

7. Be a connoisseur.

Really, nobody gives a crap about price, volume, and long-term trend. What they need to see are 3 or 4 never-before-heard-of specialty indicators, backward-looking ones especially, ones with no predictive power whatsoever. Look for the 3 or 4 scariest indicators that you can find: your readers have been waiting for that next 20% correction for - dayum! - three years or more by now, so you need to persuade them that it's coming right now.

8. Make analogies to previous market moves.

Ensure that you bring up some historical charts to show that the last time we had this thing happen, doom resulted. Your sample size of 1 or 2 is certainly sufficient to make predictions about the future, because math works that way.

9. Quote big names.

Your bear call will be one hell of a lot more persuasive if you can show that big-shots like Jeffrey Gundlach, Bill Gross, David Einhorn or Ed Yardeni agree with your call. After all, these guys made all their money by suckering idiots into letting them manage their capital and achieve a gross underperformance relative to SPY; they must be persuasive, right?

And if they all agree with you, then that must mean the market is going to do what you're expecting! Because if all the capital in the world is already positioned for that move, then it's gotta happen, right?

And finally,

10. Stumm!

For the love of god don't bring up the last dozen times you got this same call stupidly fucking wrong.

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