Who are the Perma-Bears Anyway?

A gradual procession of super bears has been quietly admitting they've been wrong in their bearish assessment of the stock market. As the major stock market indices continue to push to higher highs and as market internals continue to reflect a stellar market condition, even the most stubborn of bearish traders and market commentators have been forced to reconsider their positions. Slowly, and with little fanfare, they've been covering short positions.

Yet these same died-in-the-wool bears refuse to turn bullish and are now standing idly on the sidelines watching stock prices move ever higher. If they can admit they were wrong to sell short, why can't they bring themselves to become buyers in what is obviously a strong bull market? That is the question we'll examine in the commentary that follows.

While discussing the issue recently with friend and colleague Bud Kress, a Wall Street veteran, he offered these comments on the bears: "The perma-bears live in their own little world, wrapped tightly in a cocoon womb." I couldn't help but laugh when I heard this statement. We then began to openly ponder why certain high-profile "perma-bears" have maintained an unshakeable bearish bias for the past few years even as equity prices and corporate earnings have climbed relentlessly. Our conclusion was that there must be a "cult of the bear."