Once again, Doug Kass does a very nice job of setting forth the bear case against this market.
His arguments are quite persuasive and I see few flaws in his thinking. There is just one problem. No one cares right now. These are the same bearish arguments that existed to start the year and all we've done is trend steadily higher.
I bring this up because it illustrates why the price action is so much more important than macro arguments in the short term. The problem with big-picture arguments is that there is just no way to time when they might matter. As the economist John Maynard Keynes once said. "the market can stay irrational longer than you can solvent." There simply is no guarantee that the market is going to appreciate great wisdom or insight in the timeframe we might hope.
The solution to this problem is fairly simple. You must respect the price action until it shows signs of actually embracing the big-picture thesis you have formulated. The easiest way to lose money is to assume that the market is going to suddenly appreciate your thinking and totally fall apart.
Although I have been rooting for a market pullback, I haven't acted on that hope because there just isn't any price action supportive of a bearish bias. It doesn't matter how strong the bearish arguments might be. Until the character of the market starts to shift it is academic to focus on negatives.
There is more than one way to approach the market and many folks have done well with an anticipatory approach. But I believe the average individual trader and investors would be better served if they focused on reacting to conditions as they changed rather trying to guess when they will. We all know that the market is going to suffer a rough patch sooner or later and we want to make sure we are ready, but, as I've often written, trends tend to last far longer than most people think are reasonable.
Doug Kass is going to be right sooner or later and as soon as the price action starts to embrace his views I'll join him in the bearish camp.