"Unbalanced towards the risk side," is how John Hussman continues to describe the market's...


"Unbalanced towards the risk side," is how John Hussman continues to describe the market's current risk/reward tradeoff. His indicators - among them institutional crowding into "risk on" trades, "near panic" levels of insider selling, and a burst of new stock issuance - are at about the most extreme negative levels he's ever observed.
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Comments (3)
  • bbro
    , contributor
    Comments (11219) | Send Message
     
    You read how many items in Hussman's recession warning composite are not warning and yet he insists on ignoring these
    facts,,,,
    7 May 2012, 10:46 AM Reply Like
  • Playing the Ponzi
    , contributor
    Comments (143) | Send Message
     
    If I remember, Hussman argues that the levitation of equity prices have kept some broader indicators from flashing red. His view seems to be that equities will adjust downward to be more in line with fundamental economic activity. His report Monday said equities have to come down 15-20% before they flash red in his composite. Their levitation is keeping his composite from clear negative warning, but with the level of Central Bank activism, I think the days of the equity markets being a "leading indicator" are done. At this point, the equity markets are just the Central Bank's Pavlovian dog. They don't anticipate business cycles, they anticipate Central Bank activity.

     

    If you agree with his (or ECRI's, or other) views that underlying economic activity is far more bearish that equities currently reflect, we are getting plenty of time to get out at still very attractive prices.

     

    It seems to me that Bulls want to buy the dip without either a) signs of sustainable economic recovery, or b) sufficiently dire economic results to ensure another round of QE (yet).
    7 May 2012, 11:41 AM Reply Like
  • dbakerpa
    , contributor
    Comments (16) | Send Message
     
    Well stated. We are all playing elevated prices based on downgraded earnings estimates. Many of the companies are beating down graded EPS and earnings estimates. This makes for great games taking profit off amateur hours but is unlikely to last.
    With an eye on production and energy consumption the picture is far more dreary. The truth from China for one is hard to come by, but if you look at the coal industry it is a hint of things to come.
    Maybe we can get the trerasury to print enough money to get out of this mess...hold it ...That is'nt how it works is it?
    17 May 2012, 08:30 AM Reply Like
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