John's strength is his consistent approach to value investing. One of these days it will be in style again. matter of when, not if.
Eternal Sunshine of the Spotless Mind
John P. Hussman, Ph.D.
President, Hussman Investment Trust
September 2018
More: https://www.hussmanfunds.com/comment/mc180904/Like bubbles on the sea of matter borne, they rise, they break, and to that sea return.
– Alexander Pope
Last week, the stock market recorded the most offensive valuation extreme in history, on the basis of measures best correlated with actual subsequent returns across a century of market cycles. The advance brought the S&P 500 Index about 1% above its previous January 26 record. The current extreme eclipses both the 1929 peak, and the 2000 bubble peak.
I am aware of no plausible conditions under which current extremes are likely to work out well for investors. There are a few possibilities that could involve a smaller loss than the two-thirds of market capitalization that I expect to vanish, as the run-of-the-mill, baseline expectation for the S&P 500 over the completion of this cycle. Yet it’s worth recognizing that the completion of every market cycle in history has taken the most reliable valuation measures we identify (those best correlated with actual subsequent S&P 500 market returns) to less than half of current levels.
Tom
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I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.
John's strength is his consistent approach to value investing. One of these days it will be in style again. matter of when, not if.
"life can only be understood backwards, but it must be lived forwards" - soren kierkegaard
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