The bull and bear bronze statue stands outside the stock market, Deutsche Boerse AG, in Frankfurt, Germany.Michael Probst/The Associated Press
In their days together at Merrill Lynch, Richard Bernstein and David Rosenberg stood out as contrarians to the optimistic consensus.
Then the two famous bears became bulls.
Speaking to a business audience in Toronto on Thursday, the two men, now aligned in optimism, said they foresee strength for both the U.S. economy and U.S. stocks.
Valuations are attractive because investors remain fearful, Mr. Bernstein said. Meanwhile, what he calls the "American industrial renaissance" has elevated industrials to his most-preferred sector. "Small and mid-cap manufacturing companies in the United States, they are gaining market share."
Mr. Rosenberg, meanwhile, said that despite global economic and political concerns, he sees U.S. growth exceeding expectations going into next year, while the current risk of recession is as close to zero as possible.
"The conditions for an outright fundamental bear market aren't in place," he said. "You don't go into bear markets until the economy rolls over."
The two strategists arrived at something of a shared confidence by way of well-publicized conversions in recent years.
In the exuberant days before the financial crisis, both were labelled "permabears." With Mr. Bernstein as Merrill Lynch's chief market strategist and Mr. Rosenberg as chief economist, the pair's research warned of economic and market excesses, many of which would eventually come to be exposed.
"My nickname at Merrill Lynch was 'the skunk at the picnic,'" Mr. Rosenberg said. "That's what they called me. Who wants to have lunch with a skunk?"
In 2009, they both announced their departures from the firm about two months after the Bank of America takeover.
Later that year, after starting his own investment management firm – Richard Bernstein Advisors – Mr. Bernstein turned optimistic on U.S. stocks for the first time in a decade. Mr. Rosenberg, who became chief economist and strategist with Gluskin Sheff + Associates, finally relinquished his skepticism last year, to the dismay of some of his bearish followers.
Tim Shufelt