"Unbearably at odds with prevailing conditions," John Hussman remains strongly bearish on the...


"Unbearably at odds with prevailing conditions," John Hussman remains strongly bearish on the market. Only a few times in history has the S&P been so high when measured against a host of indicators followed by Hussman. The experience of the other instances suggests investors need to get defensive.

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Comments (9)
  • Covingtonium
    , contributor
    Comments (490) | Send Message
     
    lol @ america
    10 Sep 2012, 08:28 AM Reply Like
  • heywally
    , contributor
    Comments (252) | Send Message
     
    lol @ those who don't profit in the stock market by doing what usually works - buying the dips - because they sit around and ingest all of the doom/gloom stories all of the time. GL.
    10 Sep 2012, 08:56 AM Reply Like
  • WMARKW
    , contributor
    Comments (10787) | Send Message
     
    Think it's bad now.....wait till the drought induced price increases begin to manifest. Then add the drought next year on top.
    10 Sep 2012, 09:08 AM Reply Like
  • Rousseau SC
    , contributor
    Comments (284) | Send Message
     
    The problem with trying to analyze the market by comparison with past marekets is that Uncle Sam has never so openly and aggressively tried to manipulate the market. There is now more of an insider's advantage than perhaps ever before.
    10 Sep 2012, 09:08 AM Reply Like
  • pollyserial
    , contributor
    Comments (1113) | Send Message
     
    @Roussea: which is a pretty good reason to be defensive, in itself.
    10 Sep 2012, 12:18 PM Reply Like
  • whidbey
    , contributor
    Comments (3540) | Send Message
     
    Hussman is a lone voice crying in the wilderness. The Fed is in a position where it can probably both collapse the currency and throw the globe into turmoil unseen since the fall of Rome. But! the supreme self confidence of the Chairman is unswayed, and we live on at his whim,the Congress having jumped ship. The truth is, no one has experience with the Fed's current position, and no idea what it can do that will be relevant to our current state, which is itself unknown in any historical sense. Other than that Hussman maybe overstating the case slightly.
    10 Sep 2012, 09:50 PM Reply Like
  • WMARKW
    , contributor
    Comments (10787) | Send Message
     
    Hussman is a scientist. As such, his weekly letter is a reflection of what his data sets are telling him. So far, I have seen little emotion in his weekly narratives. So I don't think it's a matter of over or understating. I think he is just telling the world what he sees. And what he now sees is a data ensemble that is unlikely to produce positive long term results. He candidly admits that his positions have kept his funds from participating in much of this recent run up. But his position is that he has also avoided downside risk.
    10 Sep 2012, 11:28 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    What Hussman and so many expressing pessimistic views seem to miss is that, even if certain stats suggest corporate profits and equity returns may be less in the future (and it's not clear at all that the "new normal" holds any water), the alternatives into which everyone has rushed, or could choose now, offer even less return, much less on a relative basis. We're no longer in an era where one can buy some "safe" "investment-grade" government or corporate paper and happily sit on 5, 6 or 7% yields. So, the cost of playing defense is to accept no return; in fact, even negative returns versus inflation. This simply doesn't make sense because one cannot compound zero or negative numbers, even with infinite patience.

     

    On the equity front, the globe's ever-expanding human population still requires, wants and will demand myriad products and services, so corporations fulfilling those needs will continue to make money. Commerce isn't going to stop because of the financial machinations of various governments and central banks. Indeed, these governments, if anything will foment various levels of inflation, which corporations will handle and work into their pricing, whereas holders of cash and low-yielding debt instruments will be increasingly penalized.

     

    There's hardly ever been a time in memory when holding cash or other low- or non-yielding instruments makes as little sense, relative to equities, especially as a defensive move.
    10 Sep 2012, 11:56 PM Reply Like
  • GaltMachine
    , contributor
    Comments (2071) | Send Message
     
    Tack,

     

    The interesting thing about Hussman is that his stock picking is actually quite excellent. His "unhedged" performance would put him way ahead of the S&P (unlike most active managers) rather than lagging as he does now.

     

    http://bit.ly/AvYDUb

     

    It's interesting that he won't offer both choices to his clients. He truly believes his approach to protecting client's money over a full-cycle is the right one even though it is costing him business. At least he has principles.
    11 Sep 2012, 09:45 AM Reply Like
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