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Hussman: Picture a stone going over a cliff

Oct. 22, 2013 3:28 PM ETITOT, VTI, IYY, RESP-OLD, EUSA, TOTSBy: Stephen Alpher, SA News Editor11 Comments
  • With Nouriel Roubini now preferring the moniker "Dr. Realist" to "Dr. Doom," and David Rosenberg turning optimistic, who's left to sell?
  • "If you picture a small child throwing a stone upward and out over the edge of the Grand Canyon, you’ll get a general idea of the market trajectory that we expect over the completion of this cycle," says John Hussman, remaining faithful to his fans.
  • He notes the S&P 500 price/revenue ratio of 1.6 is double the pre-bubble historical norm of 0.8. At the 1987 peak, the ratio was less than 1. At the 1965 and 1972 highs, it never breached 1.3.
  • "Also, take care to note that the price/revenue multiple is twice the historical median – not twice the level where bear markets have typically ended. No, the price/revenue ratio is closer to three times that level."
  • Total U.S. stock market ETFs: IYY, VTI, EXT, TOTS, EUSA, ITOT.

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