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John Hussman's Latest Replies |
rffrydr
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HenryTo
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 Posted: Mon Apr 23, 2007 10:51 pm Post subject: |
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| At some point in August, the Russell 2000 would probably be a huge short, along with China and other EMs. |
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HenryTo
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| Posted: Mon Apr 23, 2007 10:49 pm Post subject: |
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Sounds good. At some point, we'll probably do something like that - perhaps utilizing a combination of market-timing and tactical asset allocation.
Speaking of the DJIA, the DJIA McClellan Summation Index has been making highs day after day and is now at its highest since early November of last year:
http://www.decisionpoint.com/prime/dailycharts/McOsiSumCurrentDJIA.html
This suggests that the rally in megacaps should go on at least until July or August. |
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rffrydr
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| Posted: Mon Apr 23, 2007 8:41 pm Post subject: |
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Nothing relative about cash. It buys my daily bread.
Master H., how about that? "The Market Thoughts Golden Dow" ETF. I think we already got our first customers. Of all the BS they've got listed this one's got a built in fanbase--and bridge the generations to boot (the Retirement adivisor to boot that boot.)
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nodoodahs
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| Posted: Mon Apr 23, 2007 10:18 am Post subject: |
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Even if you find a "bear" in all "markets," stock, futures, bonds, they are still a "bull" in one thing – CASH. So bull and bear are relative terms.
I'm still devoting some spare time to non-correlated futures, trying to devise some methods, but right now my account money is all in stocks or cash, high single-digit cash percentage right now.
Non-account money (that I don't write about because I don't manage it) is some in real estate, some in gold, some in cash. Millie's a gold bug and I can't get her to sell the gold, it was hell just getting her to sell the gold stocks last year …
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rffrydr
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| Posted: Mon Apr 23, 2007 9:50 am Post subject: |
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I told you that S&P is a looser 
Soybeans done that in one.... But then they never stay high. It's just two completely different "things"--tied together only by money.
--Or, you can see below for the Dow in gold. Like Constantine of old, they're missing an opportunity on that ETF.
Somebody find me a bear, please!
Gold also doesn't come with a "divisor" and self-perpetuating "market-cap weighting" and all the above. Considering your take on the VIX, y'shure you wanna embrace this market with BOTH arms, Bill??? 
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nodoodahs
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| Posted: Mon Apr 23, 2007 9:33 am Post subject: |
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Gold is up 125%+ in five years, silver 208%. Meanwhile stocks up "only" 50% in five years, with an "unfavorable" climate.
Shortening the timeframe, stock outperformed PMs over the last year, but only in the low double-digits.
However, it's the stock market | Quote: | | where conditions are overvalued, overbought, and overbullish |
Nice to know that.
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rffrydr
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| Posted: Mon Apr 23, 2007 8:30 am Post subject: |
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...And he's 20% in gold. Proving once again that there are no market bears, only closet bulls....Bullion.
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rffrydr
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| Posted: Mon Apr 23, 2007 8:20 am Post subject: |
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| Quote: | | What's happened over the past several years is that the whole definition of “earnings” has been changed from what it has been historically, while a simplistic ratio – “forward operating earnings yield compared with the 10-year Treasury yield” has taken the place of all serious valuation effort. |
This is a point I've been making. But Hussman doesn't complete the idea, content with asserting the valuation disconnect:
| Quote: | Meanwhile, the loose one-to-one correlation between the forward operating yield and the 10-year Treasury yield is largely an artifact of stocks having been deeply undervalued in the early 1980's and profoundly overvalued by the late 1990's. So yes, interest rates fell during that period, but stock yields fell far more than can be attributed to the decline in interest rates alone. To attribute the entire decline in yields to interest rates as if it is a “fair value” relationship is to introduce a profound “omitted variables” bias into the whole analysis, which is exactly what the Fed Model does.
One can quickly validate that criticism (and invalidate the Fed Model) by noting that there is nothing close to a one-to-one relationship between interest rates and earnings yields – normalized or not – in historical data prior to 1980. |
He dimisses this metric as "garbage."
Far from it. He should ask why there is this need to frame valuations in terms of yield when all the money is being made on capital gains, on equity. The crazier the returns the greater "conservatism" in the language of discription--the "derivation" of value. A 35% REIT return on a "yield" investment in 2006 to top the S&P.
It's not just that it's other people's money, it's always OPM, it's the WAY of that money. Compartmentalized, distributed and then leveraged beyond all recognition. It's been estimated that a single Hedge Fund dollar can become up to fifty-four before it's "fully invested." That kind of leverage demands "income" not "speculation." --And the very weight of that money transforms what it touches: even that great ship of "value," the stock market, into the water it floats on--an income "stream."
Turning the market into "Yield," a subset of property and a distributed, leveraged investment turns out to be anything but garbage. Quite the opposite, in far more than Subprime, it has taken garbage and spun it into gold!
The disconnect to value is a given. It's a necessary componet to any great rally. The focus should not be on what's left behind but it what form and capacity this new force will overreach itself and finally be separated from what it can do?
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rffrydr
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| Posted: Mon Apr 23, 2007 7:14 am Post subject: |
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....not anymore.
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