Englund

Amid record stock market extremes and the understandable and nearly frantic fear of missing out on the spectacular now, I thought it would be helpful to publish the May comment early.  Investors may be feeling some distress. What to do? Does one capitulate and chase the bubble at the highest valuations in history? Does one wring their hands at the prospect of a bubble that might only go higher and higher forever without end?  My hope is that this month’s comment will offer both perspective and confidence that it is not necessary to chase current extremes, nor to be anxious even about the possibility of steeper ones.J John P. Hussman May 2026 https://www.hussmanfunds.com/comment/mc260508/ 14 maj

"While I will not attempt to make any exact forecast, I do not feel there will soon, if ever, be a fifty or sixty point break [about 15%] below present levels, such as Mr. Babson has predicted." - Irving Fisher, 1929 Översatt från engelska av AI? Aktier har nått "vad som ser ut som en permanent hög platå. Även om jag inte kommer att försöka göra någon exakt prognos, tror jag inte att det snart, om någonsin, kommer att bli ett femtio- eller sextiopoängsbrott [cirka 15%] under nuvarande nivåer, som Mr. Babson har förutspått." - Irving Fisher, 1929 John P. Hussman  https://twitter.com/hussmanjp/status/1756674087399665823/photo/1 https://twitter.com/hussmanjp/status/1756674087399665823 Anders Borg och Irving Fisher om att priserna har planat ut och nått en platå. https://englundmacro.blogspot.com/2014/01/anders-borg-och-irving-fisher-om-att.html

 Michael Cembalest, chair of market and investment strategy at JPMorgan Asset Management, likes to periodically take aim at gloomy investment predictions He cites not just permabears like Albert Edwards and Peter Schiff but even luminaries like George Soros Cembalest himself allows that the stock market might actually be frothy at the moment. “To be clear, investor sentiment is currently very bullish, leverage is elevated and markets are pricing in a lot of good news. I would not be surprised to see some kind of correction later this year. If history is any guide, the Armageddonists will pick that point in time to tell you that it’s going to get a whole lot worse,” he said. Steve Goldstein MarketWatch 9 February 2024 https://www.marketwatch.com/story/this-chart-shows-the-consequences-of-listening-to-armageddon-type-stock-market-comments-fb48f9c2 What Triggered the Crash? - Hussman https://englundmacro.blogspot.com/2021/07/what-triggered-crash-hussman-funds.html Det har varit många ...

In financial circles, comparisons to 1987 are never welcome. The Black Monday crash in October of that year is still the single most terrifying day in market history; any suggestion that current circumstances are at all like the early months of 1987 is a little scary.  So it’s disconcerting to find three references to that inauspicious year in my email inbox. True, one is from Albert Edwards, the long-time very bearish investment strategist of SocGen. As for Edwards, he said: The equity market’s current resilience in the face of rising bond yields reminds me very much of events in 1987, when equity investors’ bullishness was eventually squashed. And in a further parallel, currency turbulence in 1987 played a key role in exacerbating recession worries for an equity market priced for the start of a new economic cycle.  Just like in 1987, any hint of recession now would surely be a devastating blow to equities. --- For more horror chart porn, we can move on to equities. This is h...

 SVB did not have adequate liquidity to tolerate a bank run and did not have adequate solvency to meet its liabilities. Emphatically, however, the failure did not occur because there was too little liquidity in the banking system as a whole. It occurred because there was too much. At the end of 2022, the US banking system had $18tn in domestic deposits, including an estimated $10tn of deposits insured by the Federal Deposit Insurance Corporation.  That meant there were $8tn of deposits that exceeded the FDIC insurance limit. John Hussman FT 24 April 2023 https://www.ft.com/content/af8c4d77-cb58-4893-9257-d7bf0f365cbb Why is it so hard to accept that speculative bubbles can burst? John P. Hussman, February 2022 https://englundmacro.blogspot.com/2023/01/om-inflationen-vander-ner-och-rantorna.html Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Rolf Englund blogg 5 december 2009 https://...

The chart below presents the ratio of nonfinancial market capitalization to gross value-added.  MarketCap/GVA is our most reliable valuation gauge in market cycles across history, including recent decades.  Notice how little impact the 2022 market decline to-date has had on valuations. Though recent market losses have removed the most extreme speculative froth, our most reliable valuation measures remain near their 1929 and 2000 extremes. John P. Hussman December 2022 https://www.hussmanfunds.com/comment/mc221219/   When the walls come down, investors will scavenge the news for “catalysts.” Don’t fall into this trap.  Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news.  The important question to ask is “What drove the bubble?” That’s where the lessons are.  John P. Hussman, Ph.D. President, Hussman Investment Trust July 2021 https://englundmacro.blogspot.com/2021/07/what-t...

 - Having experienced the damage that asset price bubbles can cause, we must be especially vigilant in ensuring that the recent experiences are not repeated. John P. Hussman April 2022 https://www.hussmanfunds.com/comment/mc220429/

David Wright, 78, knows a thing or two about bear markets. His Sierra Tactical All Asset Fund barely lost anything in 2008  There are no shortage of bears making similar claims these days.  The fund has lost 2.3% in 2022, beating 91% of its peers tracked by Bloomberg.  What’s underpinning Wright’s bearishness isn’t the Fed, inflation or the war. It’s the zealous behavior of investors during the past few years that sent everything from meme stocks to cryptocurrencies soaring.  below 10. Currently, while the S&P 500’s 12-month trailing P/E ratio has dropped to 21, from 32 in March 2021, it is still above the average of 19 over the past two decades. “Young people have no clue what the downside might be, what causes drawdowns and how far it can go,” Ye Xie Bloomberg 4 maj 2022 https://www.bloomberg.com/news/articles/2022-05-04/78-year-old-investor-preps-for-biggest-bear-market-of-my-life The important question to ask is “What drove the bubble?”  That’s where the...

For almost a half-century, value-investing icon Jeremy Grantham has been calling market bubbles. Now, he says U.S. stocks are in a “super bubble,” only the fourth in history, and poised to collapse. Schatzker: If you are right and stocks are in a multi-sigma deviation from the statistical trend, tell me what happens. The S&P 500 peaked at almost 4800 points. What is the bottom? Grantham: The trend line, being slightly generous, is 2500. And most of the great bubbles, the super bubbles go below trend and stay there for quite a while. Mish: There's much more in the interview. The above only covers 9 of 37 minutes. Watch the video in entirety. The second favor you can do for yourself is read Jeremy Grantham's GMO Viewpoint: Let the Wild Rumpus Begin. You will haver to register to see it, but it will be worth it.  The third favor you can do for yourself is start paying attention to John Hussman. Yes, I know, many consider him to be a washed up permabear. Well, evaluations matte...

 Yield-starved investors chased stocks to valuations beyond the 1929 and 2000 extremes. That speculation front-loaded more than a decade of future market gains into the present.  Those gains are now behind us, embedded in breathtaking multiples. If history is any guide, a collapse in valuations is likely to return those gains to the future. John P. Hussman,  February 2022 https://www.hussmanfunds.com/comment/mc220210/

“Systematic,” in this context, means a framework where policy tools such as the level of the fed funds rate maintain a reasonably stable and predictable relationship with observable economic data such as inflation, employment, and the “output gap” between real gross domestic product and its estimated full-employment potential.  In 1993, Stanford economist John Taylor proposed a systematic framework The Fed has encouraged a decade of yield-seeking speculation, as investors try to avoid being among the holders of $6tn in zero-interest hot potatoes... an all-asset speculative bubble that may now leave investors with little but return-free risk.  Valuations still stand near record extremes.  John Hussman FT 26 January 2022 https://www.ft.com/content/ece92145-443d-4e94-bfa9-7fe06cb9c00a When the time comes to ask the question – “What triggered the crash?” – remember that this is the least important question. A market crash requires nothing more than a shift in investor psychol...

 – that the world has changed in ways that make steep market losses and extended periods of poor returns impossible.  Though market valuations in 1959 were nowhere close to current extremes, it’s notable that measured from the date of Graham’s remarks, periodic bear markets repeatedly brought the cumulative total return of the S&P 500 back to or below the cumulative return of risk-free Treasury bills, all the way out to August 1982 John P. Hussman, Ph.D. August 2021 https://www.hussmanfunds.com/comment/mc210808/ Börsuppgången startade i USA den 12 augusti 1982 https://englundmacro.blogspot.com/2011/09/borsuppgangen-startade-i-usa-den-12.html

The U.S. stock market could be headed for a lost decade.  The Nikkei 225 index remains about 40% below its 1989 peak “It’s exactly when past returns are most glorious that future prospects are most dismal,” investor John Hussman, another famously bearish investment manager wrote recently .  He’s described today’s menu of choices for passive, long-term investors as “the worst in history.” Bloomberg  31 October 2020 https://www.bloomberg.com/opinion/articles/2020-10-31/personal-finance-what-if-stocks-don-t-always-go-up-advice-for-young-investors

Hussman, who’s been very vocal about getting burned by his bearish misfires in recent years — “Did it take too long for me to abandon my belief in a ‘limit’ to the stupidity of Wall Street? Yes it did”  Nice chart. MarketWatch 22 April 2020

Hussman’s flagship $312-million Strategic Growth Fund  focuses on “the protection of capital during unfavorable market conditions,” He says a 65% retreat would be a “run-of-the-mill” decline.  He pointed to this chart of margin-adjusted price-to-earnings, which he says is one of the most reliable valuation measures he’s tested across historic market cycles: https://www.marketwatch.com/story/ho-hum-a-65-market-plunge-would-be-run-of-the-mill-fund-manager-says-2019-05-07 More about Hussman

Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008.  Sue Chang MarketWatch July 31, 2018