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Paul Kedrosky wonders why bears always have the best (or at least, most compeling) arguments:

Even though the stock market has rightly been called the triumph of the optimists, with bulls stomping bears over and over for one hundred years, stock market bears not only haven't gone away, but they generally have the most compelling arguments. Their points seem so damn plausible, level-headed, empirical, and reasonable, while bulls come across as starry-eyed idealists.

Let's consider some reasons why that might be:

1. Things fail more often than they succeed. Pace availability heuristics, it is easier to think of examples of things failing than succeeding, so it gives bears more fodder.

2. Bears have the past, and bulls have the future. Bears get to argue from data, while bulls argue from what might happen.

3. Apocalypse is seductive. There is something about the thought of imminent mass ruin that really gets people's attention, as has happened with the overdone coverage (hello, Matt Drudge!) of the current credit problems in the market.

4. There is a Puritanical urge in America wherein people want to believe they (or better yet, their neighbors) will be punished for their prior success, etc., so it stands to reason that stocks will punish people after they make them a lot of money.

5. Bears have been generally wrong for so long that they have to know how to tell better stories.

I agree, especially with points three and four. I've also noticed that a wildly bullish forecast that's wrong will be mocked far more than a wildly bearish forecast. I call this the Elfenbein Asymmetrical Railing of a Lousy Forecast Syndrome.

Just a few days ago, Paul Krugman made fun of James Glassman being appointed head of our public diplomacy efforts. However, Krugman was wildly wrong about the market being a bubble in 2003. That call hasn't seemed to tarnish his reputation. Robert Shiller's reputation as a market sage is, in my opinion, completely unwarranted.

Bearish arguments are usually more interesting because they focus on the causes and the effect is left to each person's imagination. It's like in a horror movie where you rarely see the scary guy.

One day I hope to write a book called, "Alarmism and How It Threatens Your Children."

Posted by edelfenbein at December 14, 2007 10:59 AM