Beware the Most Ferocious Bear of All

One hundred years ago, in the August 9th 1903 Philadelphia Inquirer on page 15, the following was printed (emphasis mine):

You must have first bear conditions before the bear traders can do effective work, and usually the most ferocious bear is a sold out bull.

Think about the implications and the imagery – bearish traders “doing effective work” in this context means sowing discordant emotions in those around them on the trading floors so as to benefit from their existing positions. And to take it further, the bear who was just a bull being the most ferocious of all, owing to a primal need to validate his just-executed sales.

This phraseology then evolved, it would be repeated 9 days later on page 2 of the Wall Street Daily News thusly: “The reactionist, who is a sold out bull, has taken the place of the bear, and he is crying for a setback so that he can obtain a line of cheap stocks.”

In 1912, George Charles Selden will reference this maxim in one of the first books ever written about market psychology. By 1916, the New York Times is mentioning the sold-out-bull-turned-bear as an “ancient saying” of Wall Street.

Over the course of its hundred-year lifespan, this particular maxim has oscillated between hyper-relevance and forgotten disuse, cycling back and forth, into and out of the collective consciousness of the marketplace along with the ups and downs of the tape itself. And in this moment, it is once again highly pertinent; heading into the fifth year of a bull market that many have opted not to believe in from the beginning, that many have pelted with insults and accusations of treachery from the sidelines.

But fear not, as these original naysayers are now impotent; their misanthropic envy and poisonous barbs can no longer hurt you – so much ragged and spent credibility gathered in a heap of torn black fabric at their feet.

But there are others – those who have dipped in, played for awhile and have since departed – that you must truly be on your guard against. They are the very worst sort – the “sold-out bulls.”

One thing you can say about those who’ve dedicated themselves to missing the entire trough-to-peak 120% bull market is that at least they’ve truly believed in their own bullshit. While embarrassing and incidentally entertaining, they’ve at least managed to maintain a consistency, a devotion to their unyielding madness. But the sold-out bull deserves no such romanticism or condescending empathy.

No, the sold-out bull is pure evil – ferociously outspoken or slyly suggestive, he is all the time engaged in a singular mission: Scaring others out of the investments that he would like to buy back himself at lower prices.

The sold-out bull is a sickly creature, a thrashing fish on the deck of a ship, out of its element and sucking at the air for one more breath. Every trick will be employed, from fiery sermons of impending doom to sarcastic asides about the dopiness of those who are still in.

The sold-out bull is desperate and his mind is twisted, every thought and expenditure of energy is employed toward the creation of a lower entry back into the markets. Only a cheaper buy-in will vindicate the earlier decision to sell that haunts him so.

Steer clear of the sold-out bull, for the ferocity of his bearishness comes from somewhere very dark and extremely cold. He will hurt you if he can, climb over your body to get back in.