Here are some things you’ve probably been hearing during the current bull market from a wide range of investors including some tongue-in-cheek translations about what they really mean.
On Fair Value:
Bears: We think the market’s fair value is much lower than current levels. (Translation: We have to say it’s way lower than the level where we called for a crash four years ago.)
Bulls: We think the market is fairly valued at current levels. (Translation: I have no idea what the fair value of the market is and neither does anyone else.)
Investment Strategists: If earnings grow at a consistent rate forever into the future and you slap a P/E ratio of 16x on the market we think stocks will rise 8-10% this year. (Translation: Stocks are up 3 out of every 4 years so if I keep predicting this I’m bound to be right eventually.)
Value Investors: The market is overvalued but our stocks are trading at a 30-40% discount to fair value.
Growth Investors: The monthly active user numbers are off the charts for this 3 person company that’s worth $50 billion.
On Market Gains:
Bears: It’s all artificial. (Translation: I didn’t participate.)
Bulls: We’re constructive from here and see a period of consolidation. (Translation: Please don’t fall, we’re all in).
On Sentiment:
Bears: Everyone is all in on the market. These people are delusional. No one sees the risks building up under the surface.
Bulls: Everyone is still bearish. Stocks climb the wall of worry.
On Interest Rates:
Everyone: Rates are going higher.
On Reading Material:
Bears: Did you read Hussman’s latest piece?
Bulls: Did you see what Siegel wrote today?
How it All Ends:
Bears: This will end badly (Translation: I will be gloating during the next bear market but will be too scared to buy).
Bulls: We predict a soft landing with a healthy correction that will make for a nice buying opportunity. (Translation: I will be too scared to buy during the next bear market.)
Private Equity: We have plenty of dry powder for the distressed opportunities that will arise from the next crisis. (Translation: All of that money will be used to shore up current investments that run into trouble.)
On Corrections:
Bulls: A 3% loss is the new 10% correction.
On Bubbles:
Bears: Biotech? Bubble. U.S. stocks? Bubble. Bonds? Bubble. Gold? Not a bubble. It’s going to $5,000 an ounce.
Bulls: This is not a bubble. The technology boom and bust of the 1990s, now that was a bubble.
Venture Capitalists: It’s a new era, not a bubble. We’re changing the world one app at a time.
On Strategies:
Index Investors: I’m a long-term investor through thick and thin (Translation: I become a long-term investor during bull markets.)
Active Investors: Yes, we’ve underperformed, but we will protect you during the next bear market (Translation: A few of us will and we really hope it’s us.)