Fund Manager Hussman Stands By His “Permabear” Strategy

The mission of the Hussman Strategic Growth Fund is to “outperform the broad stock market over complete market cycles…but seeks to limit its downside risk using derivatives, such as options on broad market indexes,” according to a recent article in The Wall Street Journal. John Hussman, manager of the fund, was successful in insulating investors to some degree earlier in the 2000s, the article says, “but it hasn’t helped through the long bull market.” Still, Hussman is standing his ground, notwithstanding recent lackluster performance and a corresponding investor exodus. Over the past fifteen years, says WSJ, the fund has declined […]

Hussman on High Plateaus and Poor Precedents

John P. Hussman of Hussman Funds examines permanently high plateaus in the market and their poor precedents in  a recent installment of Hussman Funds’ Weekly Market Comment. He predicts a market retreat over the completion of the current market cycle, and estimates small total returns  and possible negative real returns. However, Hussman has some good news. “The most favorable market return/risk profile we identify is associated with a material retreat in market valuations that is then joined by an early improvement in our measures of market action.” Hussman addresses the idea that low interest rates ensure permanently high plateaus, pointing out that the historical correlation between Treasury yields and […]

Why Hussman Remains Bearish

Fund manager John Hussman has remained one of the staunchest bears in the stock market. And in a recent presentation (a tip of the hat to Business Insider for posting the presentation), he lays out his case for why the economy and market are not in as good shape as many believe. Hussman says the Federal Reserve’s policies have created “an ocean of zero-interest monetary base” that “encourages a speculative reach for yield”. It has also created a deficit which must emerge somewhere else as a surplus (as per economic theory). And it has emerged, he says, in the corporate […]

Hussman: Don’t Believe the Valuation Numbers

Fund manager John Hussman remains quite bearish on the market, saying that stocks are showing signs of being in the “exhaustion” part of a bull market. “We presently have an overvalued, overbought (intermediate-term), overbullish market featuring a variety of syndromes that have typically appeared in the ‘exhaustion’ part of the market cycle: elevated valuation multiples on normalized earnings, emerging divergences in market internals, an increasingly tepid economic backdrop, market prices near the upper Bollinger bands at monthly and weekly resolutions, and other factors that — taken in aggregate — have historically been associated with very weak average market outcomes,” Hussman […]