“The Ugly” from the Orlando Florida CFA Institute Conference

Russell Napier, former Attorney, researcher, and author of “Anatomy of a Bear” earned our “Ugly” label, not because of his looks, but rather due to his market call.

Mr. Napier began his presentation with don’t worry the market will go up over 50% over the next several years, but we will soon see a very strong bear market taking the S&P 500 to a low of 400. The recent low set in March was 666 on the S&P 500, making his call another 50% lower than that recent low.

Mr. Napier had several reasons for the dramatic marke moves, a few of which we will summarize:

1.  The stimulus will eventually lead to inflation. (We agree and think this is a high possibility.)
2. The market bottom in March, while extreme was not extreme enough.
3. Interest rates will begin rising over the next several years, forming a headwind for equity investors. (We agree.)
4. Bonds, are not a good investment today, but will be in the future as rates rise. (We agree 100%.)

Oddly enough, Mr. Napier’s comments most aligned with ours with the exception of the S&P 500 low call. Due to this we are currently reviewing his book and will update you with more comments in the future, along with many of his reasons and charts from his presentation. JK