It's All Fun and Games Until Someone Gets Hurt
#1
Posted 06 February 2007 - 04:20 PM
Market Climate
......As of last week, the Market Climate for stocks was characterized by unusually unfavorable valuations, relatively favorable market action on the basis of market internals, but also overbought, overbullish conditions that have historically combined with rich valuations to produce market returns below Treasury bill yields, on average. The Strategic Growth Fund remains fully hedged. This is not a market-timing position in anticipation of a short-term decline, but rather a risk-management position that recognizes the poor average return/risk characteristics that similar market conditions have historically produced.
We can't rule out the possibility that the market could extend its recent advance further. Such gains, if they occur, should be viewed from a full-cycle perspective. Even the 1500 level on the S&P 500, for example, is only about 3.5% above present levels. If we are to rule in the possibility of a 10%, 20% or even 30% market decline (all which I believe should be ruled in), we should also allow for further, though probably marginal, new highs.
Currently, the main factors that would support a speculative exposure to market risk here are measures based on market action. The issue here is that at “overvalued, overbought, overbullish” extremes, these measures have not always reliably deteriorated in advance of market losses. Though they do tend to deteriorate before major losses occur, some initial decline is often required in order to provide sufficient evidence of internal deterioration. Overbought markets usually require deeper initial declines, and therefore leave little room for error.
Once the market reaches one of those strenuously overextended conditions, the question is no longer “how much further might the market rise from this point to its ultimate peak?” but rather, “how much further might the market rise from this point to the point where the technical evidence would turn negative?” It's that second question that prevents us from taking a speculative exposure to market risk here.
The historical evidence does support using broad measures of market action to complement measures of valuation. But once the market has become strenuously overbought and overbullish, (particularly with interest rates also rising), stocks have achieved returns below Treasury bill yields, on average, until those conditions have cleared.
In bonds, the Market Climate last week was characterized by relatively neutral valuations and relatively neutral market action. I would expect to gradually increase the duration of the Strategic Total Return Fund if Treasury yields advance much beyond 5%, particularly if we begin to observe a widening of credit spreads. On balance, the economic data continue to appear relatively soft – the “positive” surprises of late have simply represented less softness than analysts had expected. Inflation figures have been constrained, but again, a widening of credit spreads would provide better evidence toward price stability. Essentially, wider credit spreads reflect concern about default risk, and in that environment, monetary velocity tends to decline, inflation pressures relent, and investors seek Treasury securities as a safe haven. Presently, the Strategic Total Return Fund maintains a duration of about 2 years, mostly in TIPS, and continues to hold about 20% of assets in precious metals shares, where the Market Climate remains favorable on our measures. .........
#2
Posted 06 February 2007 - 04:57 PM
#3
Posted 06 February 2007 - 06:27 PM
#4
Posted 06 February 2007 - 06:31 PM
#5
Posted 06 February 2007 - 06:48 PM
hussman is a professional tape fiter.....lol.........thinks fundamentals are a leading indicator for the stock market....lmao...
John Hussman is a very knowledgeable individual and is certainly not a "tape fighter". He certainly looks at fundamentals (as we all should) but also is a closet technical analyst (as are many in his position). In my opinion, it's also just a matter of time before "reality" surfaces and rears its' ugly but necessary head.hussman is a professional tape fiter.....lol.........thinks fundamentals are a leading indicator for the stock market....lmao...
#6
Posted 06 February 2007 - 06:49 PM
I agree. He's very disciplined and has the ability to calculate probabilities scientifically. His prior essay on Bayes' rule was especially interesting.Dr. Hussman has made a ton of money for his fund holders and
for himself in the process. This guy is impressing me more every
time I read his work.
If you're interested in quantitative analysis check out Jeremy Grantham's "Letters to the Investment Committee" at gmo.com. For my money, he's the best "quant" in the business -- and he has a 28-year track record to prove it. Like Hussman, he failed to meet most of his benchmarks last year, and he's now predicting a 10% gain as the most likely outcome for 2007. But he also acknowledges a 15% possibility of a major setback this year -- and increases that risk for each of the successive three years. He also writes with genuine grace and humor -- a welcome alternative the grunting, snorting and pidgin' prose that we get so much of here.
#7
Posted 06 February 2007 - 07:10 PM
hussman is a professional tape fiter.....lol.........thinks fundamentals are a leading indicator for the stock market....lmao...
I have a problem with the claims Hussman makes about returns of his fund.
My own account open in January of 2004 shows now a 10% cumulative return, not 15%+ as he claimed.
So, his average return since inception is also a suspect.
His main criteria of market condition is P/E ratio, and, therefore, we automatically in a bear market which should be hedged. In 2000-2002 period we indeed had a bear market, but he continues to be bearish since.
So, his fund become a typical bear fund that makes money on market declines.
#8
Posted 06 February 2007 - 07:17 PM
Dr. Hussman has made a ton of money for his fund holders and
for himself in the process. This guy is impressing me more every
time I read his work.
'Dr. Hussman has made a ton of money for his fund holders and
for himself in the process."
oH REALLY....LOL
hussman is a professional tape fiter.....lol.........thinks fundamentals are a leading indicator for the stock market....lmao...
I have a problem with the claims Hussman makes about returns of his fund.
My own account open in January of 2004 shows now a 10% cumulative return, not 15%+ as he claimed.
So, his average return since inception is also a suspect.
His main criteria of market condition is P/E ratio, and, therefore, we automatically in a bear market which should be hedged. In 2000-2002 period we indeed had a bear market, but he continues to be bearish since.
So, his fund become a typical bear fund that makes money on market declines.
After losing his [bleeep] in the 90.s he started over in 2000........lmao...
I agree. He's very disciplined and has the ability to calculate probabilities scientifically. His prior essay on Bayes' rule was especially interesting.Dr. Hussman has made a ton of money for his fund holders and
for himself in the process. This guy is impressing me more every
time I read his work.
If you're interested in quantitative analysis check out Jeremy Grantham's "Letters to the Investment Committee" at gmo.com. For my money, he's the best "quant" in the business -- and he has a 28-year track record to prove it. Like Hussman, he failed to meet most of his benchmarks last year, and he's now predicting a 10% gain as the most likely outcome for 2007. But he also acknowledges a 15% possibility of a major setback this year -- and increases that risk for each of the successive three years. He also writes with genuine grace and humor -- a welcome alternative the grunting, snorting and pidgin' prose that we get so much of here.
"He also writes with genuine grace and humor "....lol......an articulate incompetent......sucks em in every time........like mussolini n hitler.........snort snort
#9
Posted 06 February 2007 - 07:27 PM
Isn't there an old saying like "you can always be right on wallstreet, but if you're not making any real money, you're a loser".
Dr. Hussman has made a ton of money for his fund holders and
for himself in the process. This guy is impressing me more every
time I read his work.
'Dr. Hussman has made a ton of money for his fund holders and
for himself in the process."
oH REALLY....LOL
hussman is a professional tape fiter.....lol.........thinks fundamentals are a leading indicator for the stock market....lmao...
I have a problem with the claims Hussman makes about returns of his fund.
My own account open in January of 2004 shows now a 10% cumulative return, not 15%+ as he claimed.
So, his average return since inception is also a suspect.
His main criteria of market condition is P/E ratio, and, therefore, we automatically in a bear market which should be hedged. In 2000-2002 period we indeed had a bear market, but he continues to be bearish since.
So, his fund become a typical bear fund that makes money on market declines.
After losing his [bleeep] in the 90.s he started over in 2000........lmao...
I agree. He's very disciplined and has the ability to calculate probabilities scientifically. His prior essay on Bayes' rule was especially interesting.Dr. Hussman has made a ton of money for his fund holders and
for himself in the process. This guy is impressing me more every
time I read his work.
If you're interested in quantitative analysis check out Jeremy Grantham's "Letters to the Investment Committee" at gmo.com. For my money, he's the best "quant" in the business -- and he has a 28-year track record to prove it. Like Hussman, he failed to meet most of his benchmarks last year, and he's now predicting a 10% gain as the most likely outcome for 2007. But he also acknowledges a 15% possibility of a major setback this year -- and increases that risk for each of the successive three years. He also writes with genuine grace and humor -- a welcome alternative the grunting, snorting and pidgin' prose that we get so much of here.
"He also writes with genuine grace and humor "....lol......an articulate incompetent......sucks em in every time........like mussolini n hitler.........snort snort
#10
Posted 06 February 2007 - 07:37 PM
Let's look at the facts here, please! Note carefully how his flagship Strategic Growth Fund compares to its fund peer group average over the past one, three, and five years.