Hussman's Latest Commentary - lean 7 year of returns

[TwoCitiesCapital]

Echoes Klarman's words a bit. Klarman stated that he believes the next 10 years will have negative or very low returns.

 

This really strikes me because it was so off the mark. It's so hard to predict these things. I personally worry about the next 10-years. With interest rates so low already, and the budget deficit in the US exploding, it seems like policy makers will have little ammunition to combat any broad economic weakness.

 

To be fair, he's got two years left to be right. A 50% decline would put it back into fair territory of him being right. While they aren't supposed to happen with frequency, I think the last 20 years, generationally low interest rates and high valuations might prove instructive.

 

Further, he's stayed invested with reasonable returns over that period unlike some of the others mentioned.

[james22]

When referring to Mr. Buffett's IQ and temperament comments, I thought he meant to have the ability to independently reach a conclusion and act upon it even if contrary to popular wisdom.

 

I questioned the comment because Hussman has been entirely transparent and consistent in his approach. He's no permabear.

 

But for all his criticism of Fed manipulation, he does never question if this time *is* different because of it. That's either proof of his conviction or willful denial.

 

He's invested into his valuation/sentiment model. I imagine it'd be hard to believe a simple 'don't fight the Fed' strategy superior today.

 

We'll see.

[stahleyp]

I'm not so sure he's a terrible investor. His unhedged portfolio from inception to the end of last year, on a $10,000 investment would have been about $43,000 vs $24,600 vs the S&P 500. Perhaps he is a terrible predictor of the future (as most are) but he has an very good record for actual stock selection.

 

Yeah, but isn't that like Adjusted EBITDA returns? He would've done great except for all the losses and bad stuff that actually happened...

 

He may be a decent stock picker, but it still doesn’t change the fact that he is a lousy investor , if he frittered away his gains with hedges or selling too early. In the end, only $$$ count.

 

Fair enough. I wonder why he doesn't bring out a long only fund though.

[Liberty]

Fair enough. I wonder why he doesn't bring out a long only fund though.

 

It's like the Scorpion and the Frog.

 

It's not in his nature. He'd probably sell all his longs at the wrong moment if he didn't have a bunch of shorts and hedges to hold his hand, because he sees a catastrophe around every corner.

 

That's my guess, anyway...

[stahleyp]

I don't recall ever hearing about the Scorpion and the Frog, so I looked it up. Man, that's a sad fable. I'll make sure I don't tell my kids about it.  :P

 

But, I think you're right. His hedging probably allows him the emotional leeway to keep his positions.

[MrB]

I don't recall ever hearing about the Scorpion and the Frog, so I looked it up. Man, that's a sad fable. I'll make sure I don't tell my kids about it.  :P

 

But, I think you're right. His hedging probably allows him the emotional leeway to keep his positions.

Rather go for the farmer and the lion/goat & cabbage story.

https://www.mathsisfun.com/puzzles/farmer-crosses-river-solution.html

[Liberty]

I don't recall ever hearing about the Scorpion and the Frog, so I looked it up. Man, that's a sad fable. I'll make sure I don't tell my kids about it.  :P

 

Yeah, it's kind of a bummer... But a useful one

 

If you don't want to cry in front of your kids, don't read them 'Love You Forever' by Robert Munsch at bedtime:

 

https://www.amazon.ca/Love-You-Forever-Robert-Munsch/dp/0920668372/

[boilermaker75]

I don't recall ever hearing about the Scorpion and the Frog, so I looked it up. Man, that's a sad fable. I'll make sure I don't tell my kids about it.  :P

 

But, I think you're right. His hedging probably allows him the emotional leeway to keep his positions.

 

[MrB]

Another good lesson and not as dramatic  ;D