fredag 20 juli 2012

Liten update från Hussman

Hussman 9 juli: "marknaden är dyrare än vid 99,5% av alla historiska observationer"

As of last week, our estimates of prospective market return/risk in stocks remained in the most negative 0.5% of historical observations. We’ve examined a range of possible outcomes that could produce a shift in our investment stance. While a further advance would moderately take the “edge” off of our present defensive stance, we also estimate that a fairly small advance would also re-establish an overvalued, overbought, overbullish condition that would weigh on any material risk-taking. So the greatest amount of latitude to accept market risk would be from substantially lower levels. Of course, that’s the most likely point at which another round of QE would be initiated as well. As usual, our willingness to expand our exposure to market risk will remain focused on observable measures, not on some untestable faith-factor. For now, we remain tightly defensive. Strategic Growth remains fully hedged, with a staggered strike hedge (just over 1.5% of assets being committed to raising our put option strikes), Strategic International remains fully hedged, Strategic Dividend Value is hedged close to 50% of its stock holdings (its most defensive stance), and Strategic Total Return has a duration of about one year, just over 10% of assets in precious metals shares, and a few percent of assets in utilities and foreign currencies.

Hussman 16 juli
Market conditions have now been in this hostile set of conditions [ca 0,5% dyrast någonsin] for 16 weeks. This situation might continue on to 20 weeks, or to 24 weeks. It might continue longer - though I doubt it. What we do know, however, is that when conditions have been similarly negative historically, the S&P 500 has plunged at an annualized rate of over 40%, distributed over some of the most awful outcomes in market history.
In the day-to-day hyperfocus that the financial media places on small movements of 2-3%, and even intermediate fluctuations of 10-20%, it is important to keep in mind that the average bear market wipes out more than half of the preceding bull market advance. Those losses are substantially worse when the market decline begins from rich valuations on normalized earnings, emerges in the context of economic recession, and occurs during a secular bear instead of a secular bull, all which are relevant considerations here.
I expect that the Federal Reserve will initiate QE3, though only after more substantial market and economic weakness.
Regardless, my impression is that QE3 along the foregoing lines will be a disappointment to investors, and will in any event be unhelpful in materially reversing a global recession.

John Hussman:
Dr. John Hussman is the president and principal shareholder of Hussman Econometrics Advisors, the investment advisory firm that manages the Hussman Funds ( He holds a Ph.D. in economics from Stanford University, and a Masters degree in education and social policy and a bachelors degree in economics from Northwestern University. Prior to managing the Hussman Funds, Dr. Hussman was a professor of economics and international finance at the University of Michigan. In the mid-1980's, Dr Hussman worked as an options mathematician for Peters & Company at the Chicago Board of Trade, and in 1988 began publishing the Hussman Econometrics newsletter. Virtually all of Dr. Hussman's liquid assets are invested in the Hussman Funds.

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