Seeking Alpha

Jeffrey Bash

 
View as an RSS Feed
View Jeffrey Bash's Comments BY TICKER:
Latest  |  Highest rated
  • John Hussman: Dimes On Black And Dynamite On Red [View article]
    Tom, Black Swans tend to fly out of nowhere. For example, I am personally surprised that we have not yet had suicide bombers in crowded places in our largest cities - a low-tech attack.

    I do think the error Hussman has made is not to have expected Fed actions to go on for so long that all asset prices get priced for lousy prospective returns. Since I subscribe to the idea that we have the "Japanese Disease", I think interest rates will remain relatively low for the foreseeable future and stocks do not have a lot of downside risk (10-20% max) before they would offer attractive returns relative to continuing low rates.
    Aug 18 06:27 PM | 1 Like Like |Link to Comment
  • John Hussman: Low And Expanding Risk Premiums Are The Root Of Abrupt Market Losses [View article]
    hardog, I think just the opposite. Predicting the short term is, in my opinion, a fool's game - and Hussman appears to recognize that. However, if stocks are indeed materially overvalued, as Hussman believes - which is subject to analysis - that will EVENTUALLY be corrected. The same goes for investing in individual stocks, which most people should not do. Little company stocks are often inefficiently priced, high or low - with the stock valuation above or below the value of the business. In the long run that will be corrected by either he stock market or by acquisition (in the case of undervaluation) - but it could take years.
    Aug 16 10:43 AM | Likes Like |Link to Comment
  • John Hussman: Low And Expanding Risk Premiums Are The Root Of Abrupt Market Losses [View article]
    I think all asset classes have been forced into poor future returns by Fed actions. Since I expect interest rates to remain restrained, I think the downside risk in the stock market is not a lot. In other words, a 10-20% decline would expand risk premiums a lot versus competing investments.
    Aug 12 03:25 PM | Likes Like |Link to Comment
  • John Hussman: A Hint Of Advance Warning [View article]
    Kyle, while you could read his past remarks that way, wouldn't his track record over the last few years suggest that he was indeed predicting that (by virtue of his actions)?

    Incidentally, I think that this week's article talking about divergences is different from past ones. Not only is valuation stretched but the market is not acting well. Therefore, I would say that this one is a bit more predictive than past ones that just talked about valuation.
    Aug 5 10:40 AM | 1 Like Like |Link to Comment
  • No, I Didn't Sell Everything, But I'm Getting Cautious [View article]
    RS055, I agree with all of your comments. However, I would think that wealthy individuals would keep the spread narrower, by buying these CDs up in lieu of Treasuries or similar bond funds. It occurs to me that high volume issuance could be the factor that overwhelms such demand and keeps the spread wide. The banks can't issue Treasuries and maybe issuing 10-year money at these rates beats other longer term borrowing costs for the banks?
    Aug 5 10:10 AM | Likes Like |Link to Comment
  • No, I Didn't Sell Everything, But I'm Getting Cautious [View article]
    Oops! Forget that "crossover" comment. With a per CD commission rate of $2 per $1,000, that is 20 cents per year on a 10-year CD, or 2 basis points, so it always pays to buy in secondary market (now).
    Aug 5 09:58 AM | Likes Like |Link to Comment
  • No, I Didn't Sell Everything, But I'm Getting Cautious [View article]
    RS055, thank you. I had failed to notice Vanguard maintained a secondary market. Primary (no commission) is back up to 3.35%. Commissions are $1 to $2 per $1,000 face depending on type of account. Therefore, a 7 basis point gain (at 3.42%) has a crossover of about $30,000 face amount before it pays to buy secondary at $2 per $1,000 commission. I still can't figure out why they would yield so much more than a 10-year Treasury. Any idea?
    Aug 5 08:45 AM | Likes Like |Link to Comment
  • No, I Didn't Sell Everything, But I'm Getting Cautious [View article]
    RS055, Vanguard has the 10 year CD available at 3.30% now, down from 3.35% for a very long time until last week. Fidelity and others are similar. Do you know where can you get them at the full yield, without the broker "haircut"?
    Aug 4 11:15 AM | Likes Like |Link to Comment
  • John Hussman: Yes, This Is An Equity Bubble [View article]
    Kyle, I particularly like his more recent point that the current valuation is OK if you recognize what it means for future returns and are fine with negligible future returns. This, in my opinion, is the strategy mistake he and a lot of others made with their fund management - not expecting that the Fed would continue the low rate policy for so long that future returns for most asset classes, including stocks, would get priced to be very little.

    Since I think that neither the economy nor rates will improve or be allowed to rise much - we perhaps have the "Japanese Disease" - I am skeptical that stocks will correct so much any time soon that they offer historically good returns, just less bad ones. Hussman's ten year S&P return of under 2% might go to 4-5% - 20-30% decline - but I doubt more.
    Jul 30 10:23 AM | Likes Like |Link to Comment
  • John Hussman: Yes, This Is An Equity Bubble [View article]
    I like "capitulation buying".

    I do not subscribe to Hussman's strategy but to sound asset allocation. Anyone who is older and had a strategy of 60% stocks years ago has seen the proportion in stocks go to over 80% because of the advance. Not adjusting the allocation back toward 60%, by selling some or writing in-the-money calls, because of complacency or the fear of missing out on even more gains, is unwise, in my opinion.
    Jul 29 10:11 AM | 1 Like Like |Link to Comment
  • John Hussman: Yes, This Is An Equity Bubble [View article]
    The characteristic of this market that I see is complacency. That means that one fine day the market could wake up with a plate full of issues that it suddenly stops ignoring and has a material correction. In fact, most times a correction will not be for the specific reason that newspapers state, but that one was just due - or long overdue in this case.
    Jul 29 12:24 AM | 2 Likes Like |Link to Comment
  • John Hussman: Optimism Vs. Arithmetic [View article]
    A 10-year compound annual revenue growth rate for the market of 9.6% is unrealistic. Substitute 5% and E goes down.
    Jul 28 11:41 AM | Likes Like |Link to Comment
  • John Hussman: Optimism Vs. Arithmetic [View article]
    ".... something odd, but possible, happens in the financial markets." .... I have been giving some thought to that. We have AMZN down 10% after hours on under-appreciated results; a downed passenger plane last week and now Russia shooting into Ukraine over the border; ISIL in the Middle East; Obama criticizing "unpatriotic" inversions in response to the uncompetitive 35% corporate tax rate, etc. My perception is that there are getting to be too many issues being juggled by the markets and world and too little leadership to deal with them intelligently. I would not be surprised if sooner rather than later we have some event that may not in and of itself be seen as a Black Swan event, but elicits that response from the market - in a major "risk-off" shift.

    I think that being sure that asset allocations are reasonably in line with personal objectives would be prudent at this time, as opposed to the wholesale liquidation suggested by Hussman's work. Assuming that means shifting some money from stocks to cash and bonds, I prefer the 10-year CD available at Vanguard yielding 3.35% for any increase in the bond component (as previously noted).
    Jul 24 11:24 PM | Likes Like |Link to Comment
  • John Hussman: Optimism Vs. Arithmetic [View article]
    Another alternative is a 10 year FDIC-insured CD, now available at Vanguard yielding 3.35%, nearly 90 basis points above the corresponding 10-year Treasury. It has the added protection that under the current yield curve - which may change - after 5 years that yield would be 100+ BP above "normal", so some downside protection.
    Jul 22 10:16 AM | Likes Like |Link to Comment
  • John Hussman: Optimism Vs. Arithmetic [View article]
    I believe he has repeatedly said that profit margins were far above historical norms. So, unless this time is different, "E" is eventually headed lower. In fact, this time may be different, given the cost of capital is ridiculously low, stock buybacks and acquisitions are enhancing earnings and reducing supply of shares, and tax inversions are cutting taxes. Stock prices reflect supply and demand like anything else. There has been endless press that nothing but stocks offers any meaningful return. I would like to see some analysis on what has happened to the supply of shares to buy.

    My view is that the market over the next ten years will offer sub par returns, but not as low as he thinks. This would be consistent with mediocre returns on everything else. In other words, stocks are being priced to match poor future returns elsewhere, which I think is actually logical (and he discusses).
    Jul 21 11:48 PM | Likes Like |Link to Comment
COMMENTS STATS
68 Comments
64 Likes