THE PRUDENT BEAR

This investor is still in the market but is unwilling to bet against stocks in a major way because the trend — at least for now — is up.

Axel Merk, manager of the Merk Funds, dubs himself a “prudent bear.” Translation: “We would love to short the markets more ( or bet on falling stock prices) but have been reluctant to do so,” Merk says.

Central bank support, he says, has pushed asset prices higher, which makes the market “highly vulnerable.”

“It’s discomforting to be in the markets, as bull or bear, period,” Merk says. “What makes these markets so vulnerable is that fear has been taken out. The lack of fear has different names: low volatility, low credit spreads, complacency. However, markets are still risky, ( and) fear ought to return. So I’m thinking of the market as a pressure cooker.”

MERK INVESTMENTS LLC Axel Merk of Merk Investments LLC