A ‘Bear’ in This Market Is Someone Who Is Only 75% Long Stocks

When someone identifies as a bear, normally it means they’re selling. In this market, where anyone who dares do that gets crushed, it just means you’re a little less bullish than everyone else.

That’s according to a survey by the National Association of Active Investment Managers, which found that in the current distribution of sentiment, a bear is someone who is 75% invested in stocks.

“You hold your nose and you buy,” David Kudla, chief investment strategist at Mainstay Capital Management LLC, said in an interview on Bloomberg Television. “Stocks have been divorced from fundamentals.”

Bears are bulls and shorts are long. It’s borne out in earnings season, too, where companies that raise financial guidance are being punished, while those with no profits are surging. Definitions are warping when heavily shorted shares such as GameStop Corp. and Bed Bath & Beyond Inc. soar, partly due to interest from day traders who have gathered in Reddit’s WallStreetBets forum to battle professional speculators. A basket of stocks tracked by Goldman Sachs Group Inc. jumped 4.5% Monday, extending its 2021 gain to more than 30%.

According to NAAIM, whose members include investment advisers from 200 firms overseeing more than $30 billion, the most-bearish group typically has a net-short position averaging 80% in data going back to 2006. With all bulls and bears included, the managers have tended to be 65% long in stocks. Last week, the overall exposure stood at 113%, a three-year high.