Where's the Bear?

For all of the attention that has been given to the Fearless Girl and Charging Bull statues on Wall Street, I've been marveling at what's missing from the picture:  a bear. It's not just that an ursine addition adds whimsy to virtually everything. It's what its absence says about our market culture. 

The bull, of course, is the symbol of a rising market, the bear, a falling one. And Americans love bulls and hate bears.  When they "do the numbers" on the news (the biggest waste of airtime), it's always a good thing when markets are up, and bad when they're down.  This is idiotic.  We should want market prices to be right, which should mean an indifference between short and long positions.  I love the Fearless Girl statue, but if we're telling a market story, not a gender equality story, then the Charging Bull should be faced off by a Roaring Bear.  

But it's not just our culture that hates bears.  Our regulatory system does too.  Short-sellers are subject to various regulatory impediments in actually executing their positions, but more broadly, certain types of investors lack the ability to go short altogether.  I have a tax-deferred 403(b) retirement plan (sort of a 401(k) for academics).  It's restricted to mutual funds (and functionally means no ETFs).  This means that I lack short investment possibilities altogether.  Instead, I'm forced to go long whether or not I believe in the market.  The pro-long bias in our market is a real problem, because it encourages bubbles.  If we'd start facilitating more shorts, we might end up with a less volatile market because the highs would never get as high, so the crashes wouldn't be as big.  Decreasing such volatility would facilitate business planning and be a really powerful form of consumer protection.  

All of this brings me to a more concrete point: what the hell is going on the stock market right now?  We're in a market that continues to rise and rise without any change in fundamentals. I can't believe that the market is truly banking on some sort of Trump tax break (which will ultimately have ruinous consequences, but that's another matter). I haven't seen any convincing explanation of why the level of the Shiller PE Ratio (just shy right now of Black Tuesday levels) makes sense. I'm all ears, but until then, I think we're in a market-wide stock bubble.  

I don't know what will pop it (or when)--historically bubble tend to burst in the fall, but that's because of harvest-time movements of money; maybe today folks come back from summer vacations with a clearer eye. A piece of me wonders if we're in the Trump Market, a world in which stock prices don't respond to normal pressures, just as Trump got elected while violating every rule of normal politics. Still, I'm not going to bet against a perpetual suspension of gravity.