Da Bears

I found an interesting quote at The Big Picture blog

If you’re bullish and wrong, you usually have plenty of company. But if you’re bearish and wrong, it’s almost unforgivable

-Bob Kargenian, TABR Capital Management, Barron’s DECEMBER 15, 2012

There is much to consider in this quote.

Looking at it from the perspective of a professional money manager, this statement is as true as any statement can be. Investors want results. If the person who is responsible for managing the portfolio and its risk is expected to make money. After all, that’s why they get paid.

When they get caught unprepared for a severe market decline, there may be a modest amount of asking: “why didn’t you see it coming?” But for the most part clients tend to be forgiving because ‘everyone’ – except for the few proud bears – took a hit when the unexpected downturn occurred. Clients seldom ask why the portfolio manager did not protect their assets with option strategies.


Missing the rally or having too much cash or being too conservative when markets are moving higher and clients run for the exits. They believe it is so easy to rack up giant profits when markets rally. They expect their managers to own the best stocks in the best sectors. In short, inability to keep up with the benchmark is unforgivable.

That doesn’t seem right to me. The money manager who can protect assets during declines – even at the expense of earning a bit less during good times should be the most sought-after manager in the field. Alas, greed conquers all.


One Response to “Da Bears”

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