mickeyd
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I found this an interesting article written by John Hussman. Here are a few snips from it. I realize that he is pushing his fund (HSGFX, mentioned below by name) so I would expect the article to tilt towards it's philosophy.
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In today's "Outside the Box," we will focus our attention on a well-thought piece by John Hussman, Ph.D. John is the President of Hussman Investment Trust where he manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.
In his Weekly Market Comment, John addresses the continued bull market run and compares it in duration to that of previous market cycles. We have currently gone 906 days without a 10% correction. John goes on to further explain the meaning behind this trend by discussing the level of P/E ratios and the climate for bond yields. One particular interesting part of his analysis is when he shows returns over a "full market cycle.
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The key is that the market's ability to defy valuations is ultimately temporary. Over the long-term, investors can get perfectly good results by focusing only on valuations and ignoring the quality of market action altogether. Over the short-term, however, this can be very frustrating because the market can defy valuations for months or in some cases years before ultimately wiping out those "speculative" gains by returning to more normal valuations.
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On a short-term basis, despite the modestly favorable tone of market action, the status of the market at the moment can be classified as "overvalued, overbought, and overbullish." The S&P 500 currently trades at 18.3 times record earnings (on record profit margins), stocks are clearly overbought on the basis of a variety of technical measures, and advisory bulls exceed 50%. Historically, this set of conditions has been associated with short-term market losses, on average, even when our broader measures of market action have been favorable.
http://www.investorsinsight.com/otb_va_print.aspx?EditionID=404
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In today's "Outside the Box," we will focus our attention on a well-thought piece by John Hussman, Ph.D. John is the President of Hussman Investment Trust where he manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.
In his Weekly Market Comment, John addresses the continued bull market run and compares it in duration to that of previous market cycles. We have currently gone 906 days without a 10% correction. John goes on to further explain the meaning behind this trend by discussing the level of P/E ratios and the climate for bond yields. One particular interesting part of his analysis is when he shows returns over a "full market cycle.
~~~
The key is that the market's ability to defy valuations is ultimately temporary. Over the long-term, investors can get perfectly good results by focusing only on valuations and ignoring the quality of market action altogether. Over the short-term, however, this can be very frustrating because the market can defy valuations for months or in some cases years before ultimately wiping out those "speculative" gains by returning to more normal valuations.
~~~~~
On a short-term basis, despite the modestly favorable tone of market action, the status of the market at the moment can be classified as "overvalued, overbought, and overbullish." The S&P 500 currently trades at 18.3 times record earnings (on record profit margins), stocks are clearly overbought on the basis of a variety of technical measures, and advisory bulls exceed 50%. Historically, this set of conditions has been associated with short-term market losses, on average, even when our broader measures of market action have been favorable.
http://www.investorsinsight.com/otb_va_print.aspx?EditionID=404