I’ve been doing a lot of thinking about my market view versus the predominantly bullish tone that has been in control for the past 5 years. I know it seems that I am never bullish, but if you just take a look at the HEDGEfolios Timing Indicator, you’ll see that there has been a bullish reading 79 of the 148 weeks it has been shown here - that’s 53% of the time. But the market has been extremely bullish except for a few weeks over the past 5 years so it feels worse than it really is and besides, HEDGEfolios has greatly outperformed the S&P 500 each year I have been publishing this stuff.

So why am I bearish? I cover almost 4000 stocks and ETFs - not the 500 shown by the S&P index everyone seems to use as a benchmark and certainly not the 30 shown in the DOW. My perspective is a lot wider and includes all market caps, not just the biggies. Right now, if you pull out about 10-15 stocks from the S&P or Nasdaq composite, they don’t look so hot. There is a massive divergence right now and it’s not getting a lot of attention in the major media. I suggest you take notice because things like this usually don’t last forever and when they stop, it gets ugly fast. So the next time you get all hyped up about a few big companies doing well, think about the other side of that.

Another reason HEDGEfolios results in a bearish view right now is that I do not believe in weighting one stock over the other. I treat every stock the same. Obviously, that is not in line with construction of the major indices but it’s my preference. I don’t like the bias that the high price of a stock has in the Dow or the extra weightings given to a few big stocks in other indices. So when a few of the biggies are doing extremely well, you get the situation we have now.

On a macro level, I am bearish because I believe a lot of the doom and gloom the permabulls love to ridicule or pretend does not exist or use in contrarian ways. I believe we have stagflation with the inflation side being much worse than is being measured and reported by our government. I believe that the economy is struggling and yet, not as bad as some people.  I don’t believe the Fed is the answer to all the market ills.  In fact, I feel they are contributors to some of the things that will end up hurting us.  Many people that are bullish seem to be placing all their faith in the Fed and that is one big difference between my view and the market view.  I feel the consumer is in trouble but spending anyway. If you’ve ever been around a manic depressive person, you’ll note that they seem happy spending while the real part of their life is in deep trouble. I feel many consumers and the measurement of their purchasing behavior reflects this manic depressive scenario.

There are other reasons why my view is not bullish but it really doesn’t matter much. If I obsess about things that the majority of investors ignore, I lose. So I try to balance my personal thoughts with what other people are doing.  I am willing to be bullish even though I think it’s stupid and dangerous to do so.  The difference is that I never stop being a skeptic and cynic and pessimist and realist and all the other negative names associated with how I do what I do.   Right now, there is great risk in this market and while that could change very quickly, I am comfortable not being bullish.