Is this time really different? Another well-known "U.S. stock short seller" has apologized

First Morgan Stanley, then JP Morgan, and now David Rosenberg... short sellers in the U.S. stock market are surrendering one after another. On December 6, top Wall Street economist and president of Rosenberg Research, David Rosenberg, apologized for his pessimistic view on the U.S. stock market. Rosenberg stated: “From valuations to sentiment, to overcrowded positions—it's time to stop the high talk about all the reasons the U.S. stock market is overvalued, as well as the pessimistic judgments based on various variables I have relied on in the past.” Last month, Rosenberg was still advising people to hold cash, as he believed almost all assets were overvalued. However, Rosenberg pointed out that he is not completely abandoning the view that the U.S. stock market is overvalued, but is trying to understand the current situation. Rosenberg still expects a 5% to 10% correction in the U.S. stock market, which could be triggered by the Federal Reserve's hawkish policies. Rosenberg stated: “But the question is, in the face of this obvious long-term bull market, how should we respond when a correction occurs? I would choose to ‘buy on the dip.’” So far this year, the S&P 500 index has repeatedly hit new highs, rising over 28%, with an expected annual increase of over 20% for the second consecutive year. Rosenberg: I underestimated artificial intelligence Rosenberg believes that with breakthroughs in artificial intelligence technology, the stock market will extend its outlook and expectations, rather than just looking at the next year. Only when these expectations are proven to be excessive will the stock market enter a bear market. Rosenberg stated: “While we (the U.S. stock market) may be in a bubble, it may take years to know, just like the internet bubble in the mid to late 1990s—when high productivity and profit growth peaked after 2000 with the technology sector's earnings cycle and sharply declined, revealing excess supply and misinvestment... The market is telling us that we are in a period of ‘paradigm shift’ regarding future growth and profits. The S&P 500 index is inherently a long-term indicator, which means that simply looking at the price-to-earnings ratio over the past 12 months or the next year is actually looking at lagging data; investors have already set their sights beyond a year.” Therefore, for the market to crash, there needs to be an earnings recession or signs that artificial intelligence and related orders are not being completed on time. Rosenberg believes that if generative AI is indeed a disruptive innovation, then the high price-to-earnings ratios in the stock market may not represent a bubble. So, why was this not realized earlier? Rosenberg explained: “I clearly underestimated the dramatic impact of artificial intelligence on market psychology and its powerful driving force on investors' long-term profit expectations, which are the main drivers of stock market valuations this year. I now understand that to completely break this trend and reassess the impact of artificial intelligence on future productivity growth and profitability will require tremendous effort ”