John P. Hussman, Ph.D., is president and principal shareholder of Hussman Econometrics Advisors, the investment advisory firm that manages the Hussman Funds. Every Monday, he offers up interesting and provocative insights on investing, economics, and markets in his Weekly Market Comment. In this week's edition, he details "A Who's Who of Awful Times to Invest":
December 1961 (followed by 28% market loss over 6 months)
January 1973 (followed by a 48% collapse over the following 20 months)
August 1987 (followed by a 34% plunge over the following 3 months)
July 1998 (followed abruptly by an 18% loss over the following 3 months)
July 1999 (followed by a 12% loss over the following 3 months)
December 1999 (followed by a 9% loss over the following 2 months)
March 2000 (followed by a 49% collapse in the S&P over the following 30 months)
The defining characteristics of these instances were:
1) price/peak-earnings multiple above 18
2) 4-year high in the S&P 500 index (on a weekly closing basis)
3) S&P 500 8% or more above its 52-week moving average (exponential)
4) rising Treasury and corporate bond yields
Depending on how we define the interest rate trends, we can include two additional
historical instances of these conditions: October 1963 and May 1996, both closely
followed by 7-10% corrections.
One more instance completes the list: July 2007.
Click here to read more.
i respect Dr. Hussman a lot. However, i am not sure i agree with his assessment that his funds will not sustain losses in a continued market advance. Few months ago i bought an equal amount of the Hussman Fund and the CGM Realty fund (CGMRX). Today i sold my Hussman Fund. Over that span the Hussman fund was down about .3%. The CGMRX was up about 13%.
He may be right that the market is topping here. But unless the bottom is going to fall off overnight i am willing to wait till the market tops and starts heading down before i adjust my portfolio's posture.
Posted by: Born2Code | July 16, 2007 at 07:50 PM
Have you looked at the TFS Market Neutral Fund? Its ticker is TFSMX.
Posted by: | July 16, 2007 at 10:52 PM