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Markets Face 'Vicious Correction': Kass

Published: Wednesday, 13 May 2009 | 12:15 PM ET

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By: JeeYeon Park
CNBC News Associate

In time, markets will go higher but there’s going to be a "vicious correction" along the way, said Doug Kass, president of Seabreeze Partners.

“It’s going to be bumpy and have a lot of potholes, so we’ll have to be cautious,” Kass told CNBC. “I’m more short than long for the first time this year.”

Kass predicted that the market had reached a "generational low" in early March.

“The good news is that I believe the view that we’ve seen a 'generational low’ is intact and we’re not going to go anywhere near where we were,” he said.

He used an unusual metaphor for the market rebound — involving tween pop star Miley Cyrus:

“The second derivative rally that I expected has certainly occurred,” he said.

“And I think stocks are ahead of fundamentals. I would call the [rally] a 'Miley Cyrus' recovery. It’s very popular now, but in both cases, Miley Cyrus and the stock market may not have much talent underneath, which is reflected by prices. And perhaps, it won’t be enduring.”

Kass also said that the investment plan of buy-and-hold is “semi-dead” and that the strategy must be mixed in with “an opportunistic trading style.”

Disclosure:

No immediate information was available for Kass or his firm.

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