I concluded then and I believe stronger now, in light of the events of the last two weeks (in AI, market structure, valuation, geopolitical, interest rates, inflation, deficit/debtload, etc.) the following:
* Upside reward is dwarfed by downside risk.
* Having an outsized or even an in-line long exposure entails not only a great deal of risk — but is literally gambling (due to the risks of an uber leveraged market structure — in products and strategies).
* In general, market participants are unduly optimistic and positioned very long with limited cash reserves (as a percentage of the portfolio).
* The singular notion that since S&P EPS growth will be robust this year (+20%) so equities are undervalued is challenged by the reality of history (I didn’t get to it today but will tomorrow!).
Doug Kass is a world-renowned hedge fund manager with decades of experience and success navigating through some of the most turbulent periods in market history. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality.
On TheStreet Pro, Kass provides frequent market commentary and investing ideas for active investors throughout each trading day in Doug’s Daily Diary. He also serves as president of Seabreeze Partners Management Inc. Previously, he served as a senior manager at Omega Advisors, a $6 billion investment partnership. He co-authored a book with Ralph Nader and the Center for the Study of Responsive Law called “Citibank: The Ralph Nader Report” and can be found as a guest host on CNBC's "Squawk Box."
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