John Hussman

Weekend Reading: The Coin Flip Market

The problem for individual investors is the “trap” currently being laid between the appearance of strong market dynamics against the backdrop of weak economic and market fundamentals. There will be a collision between the fantasy of asset prices and the reality of the underlying fundamentals. This will particularly be the case if the much anticipated rebound of economic growth and earnings fails to materialize.

Bulls, Bears & The Broken Clock Syndrome

“Put simply, most apparent “opportunities” to obtain investment returns above zero in conventional assets over the coming decade are based on a misunderstanding of valuations, total returns, and historical yield relationships. At current valuations, virtually everything is priced for a decade of zero. The unwinding of these speculative extremes is likely to be chaotic, and will likely occur over a shorter horizon than investors imagine."

Weekend Reading: Willful Blindness

The problem for individual investors is the “trap” that is currently being laid between the appearance of strong market dynamics against the backdrop of weak economic and market fundamentals. Ignoring the last two to chase the former has historically not worked out well.

"It's Only Like This, Until It's Like That"

It is not surprising that after one of the longest cyclical bull markets in history that individuals are ebullient about the long-term prospects of investing. The ongoing interventions by global Cental Banks have led to T.I.N.A. (There Is No Alternative) which has become a pervasive, and “Pavlovian,” investor mindset. But therein lies the real story...

Weekend Reading: The Global Dichotomy

If the economy is growing, and there is really “no recession in sight,” then why is there such a panic by the BOJ, BOE and ECB to expand their accommodative programs? Why isn’t the Fed raising their benchmark rates? Why are earnings deteriorating across sectors on an unadjusted basis?

"This Whole Mania Will End Tragically" - Impermanence & Full-Cycle Thinking

"This whole speculative mania will end tragically. How did we not learn this from 2000-2002, or 2007-2009, or the collapse of every other mania in history? My sense is that it’s a mistake to assume that yield-seeking hasn’t been fully exhausted across every class of securities...For those who insist that there is always a bull market somewhere, I would suggest that the most likely bull market to emerge here will be in bear market assets."

Weekend Reading: DNC – Discerning & Notional Conjugations

This week, the headlines have been dominated by the Democratic National Convention pushing Janet Yellen’s latest FOMC non-action to 'page 6'. "Global instability is now the perma-excuse for the Fed.” The only question will be where that instability pops up next?

Weekend Reading: If I Was Janet Yellen

Unfortunately, for Janet, this is the 'trap'. The liquidity will dry up, the inventory restocking cycle will end, and the next “crisis” will be on the horizon with Ms. Yellen remaining stuck near the “zero bound.”  The past opportunities to “normalize” interest rate policy have come and gone. This opportunity will likely pass also and, as always, the Fed will realize far too late they are trapped. But by then, it won’t matter much to investors, or what’s left of them, anyway.

"All-Time-Highs"

"...central bankers seem to view elevated security valuations as “wealth.” The longer this fallacy persists, the worse the subsequent fallout will be. I have little doubt that future generations will look at the reckless arrogance of today’s central bankers no differently than we view speculators in the South Sea Bubble and the Dutch Tulip-mania. Unfortunately, there is no mechanism by which historically-informed pleas of “no, stop, don’t!” will penetrate their dogmatic conceit. Nor can we change the psychology of investors."

Weekend Reading: Central Banks Save The World

For now, Central Banks have seemingly accomplished the rescue of the entire global financial system by one again lofting asset prices higher. The problem, however, remains the underlying fundamental issues of weak earnings, slowing economic growth and a collapsing Chinese economy. There is a point, unknown to anyone currently, where the failure of monetary policy will occur.

It's Not The Brexit Stupid!

Brexit is just a symptom of the disease eating away at the fabric of our global economy. Lehman’s collapse was not the cause of the 2008 worldwide financial crisis. It was just the excuse for something that was going to happen no matter what. Bad debt, bad bankers, bad regulators, bad politicians, media cheer leading, and a willfully ignorant populace were a toxic combination – and it’s worse today.