John Hussman

John Hussman

Last Update: 05-12-2016

Number of Stocks: 187
Number of New Stocks: 44

Total Value: $755 Mil
Q/Q Turnover: 41%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

John Hussman Watch

  • The Coming Fed-Induced Pension Bust – John Hussman

    Last week, I observed that, based on the most reliable measures we identify (those having the strongest correlation with actual subsequent 10- to 12-year investment returns across history as well as in recent cycles), “the expected return on a traditional portfolio mix is actually lower at present than at any point in history except the 1929 and 1937 market peaks. QE has effectively front loaded realized past returns while destroying the future return prospects of conventional portfolios, at least as measured from current valuations. As a result, the coming years are likely to see a major pension crisis across both corporations and municipalities because the illusory front loading of returns has encouraged profound underfunding.”


    On Thursday, Chicago’s Municipal Employees Annuity and Benefit Fund reported that its net pension liability soared to $18.6 billion, from $7.1 billion a year earlier, as a result of new accounting rules that prevent governments from using aggressive investment return assumptions (thanks to my friend Mike Shedlock for his post on this news). But here’s the kicker – the rules only apply after pension funds go broke. In Chicago’s case, pension return assumptions had been optimistically set at 7.5%, and the city had vastly underfunded its obligations.

      


  • Blowing Bubbles: QE and the Iron Laws – John Hussman

    Look across the room you’re in, and imagine there’s a $100 bill taped in the far upper corner, where the walls and ceiling meet. Imagine you’re handing over some amount of money today in return for a claim on that $100 bill 12 years from now.


    Drop your hand toward to the floor. If you pay $13.70 today for that future $100 cash flow, you can expect an 18% annual return on your investment over the next 12 years.

      


  • John Hussman Sells Broadcom, Cognizant

    John Hussman is the president and principal shareholder of Hussman Strategic Advisors, the investment advisory firm that manages the Hussman Funds. He is also the president of the Hussman Investment Trust. Hussman manages Hussman Strategic Growth Fund, which invests primarily in U.S. stocks, and Hussman Strategic Total Return Fund, which invests primarily in U.S. Treasury and government agency securities. These were the most heavily weighted sales during the first quarter.


    The guru closed his stake in Broadcom Corp. (BRCM) with an impact of -2.05% on the portfolio.

      


  • Latent Risks and Critical Points – John Hussman

    The Standard & Poor's 500 Index remains just 3.5% below its May 2015 peak yet is also at the same level it set in November 2014, 18 months ago. I continue to view market action as tracing out the arc of a major top formation, completing the third speculative financial bubble in 16 years. Downside risk remains significant, and even our short-term view has shifted back from neutral to hard-negative. Given that the behavior of single indices can be “noisy,” the following chart shows the average behavior of major global equity indices, including the U.S., European, British, Hong Kong and Japanese stock markets. This may provide a broader view of equity market pressures here. The respective level of each index on Dec. 31, 2014 is scaled to 1.0.


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  • John Hussman: 'Justified Consequences'

    Market conditions continue to be characterized by the likelihood of extremely poor long-term and full-cycle outcomes, with expected 10- to 12-year estimated Standard & Poor's 500 nominal total returns in the 0% to 2% range, negative expected real returns on both horizons and the continued likelihood of a 40% to 55% interim market loss over the completion of the current cycle; a decline that would represent only a typical run-of-the-mill cycle completion, based on valuation measures most tightly related with actual subsequent market returns across history.


    The degree of second-guessing regarding historically reliable valuation measures is perplexing, given that there has been no deterioration whatsoever in the correlation between these measures and subsequent market returns on a 10- to 12-year horizon (see the recent comment, "Permanently High Plateaus Have Poor Precedents," and note that these measures have been just as reliable in recent cycles as they have been for the better part of a century).

      


  • John Hussman: Lessons From the Iron Law of Equilibrium

    Last week, the spread between bullish and bearish sentiment widened substantially, pushing market conditions to what I’ve often described as an “overvalued, overbought, overbullish” syndrome.


    While our general outlook has remained rather neutral in recent weeks, this shift pushes our immediate outlook back to hard-negative. However, I should emphasize that this outlook is not particularly robust at present. Indeed, we could soon find ourselves back to a neutral outlook in the event of a moderate further improvement in market internals. As I’ve emphasized regularly since mid-2014, when we adapted our methods to address the key challenges we encountered in the half-cycle since 2009 (see the Box in The Next Big Short for a detailed narrative), the advancing half-cycle since 2009 has been different from market cycles across history, in that aggressive central bank easing has persistently deferred the typical consequences of overvalued, overbought, overbullish conditions. In the face of QE, one had to wait until market internals deteriorated explicitly (indicating a shift toward risk-aversion among investors) before adopting a hard-negative outlook.

      


  • Murray Stahl Buys Exxon, Suncor in 1st Quarter

    Murray Stahl (Trades, Portfolio) is the chairman of Horizon Asset Management Inc. During the first quarter he bought shares in many stocks, and the following are his most heavily weighted trades:


    Stahl raised his stake in Silver Wheaton Corp. (SLW) by 35.19% with an impact of 0.58% on the portfolio.

      


  • John Hussman: Permanently High Plateaus Have Poor Precedents

    “Stock prices have reached what looks like a permanently high plateau.”


    Irving Fisher, October 21, 1929

      


  • John Hussman: Rounding the Bubble's Edge

    The single most important quality that investors can have, at present, is the ability to maintain an historically informed perspective amid countless voices chanting, “This time is different,” and arguing that long-term investment returns have no relationship to the price that one pays.


    From a long-term, historically informed investment perspective, the Standard & Poor's 500 remains obscenely overvalued on valuation measures most closely correlated with actual subsequent market returns (and that have remained tightly correlated with actual market returns even in recent cycles). We estimate that S&P 500 nominal annual total returns will average only about 0% to 2% on a 10- to 12-year horizon with negative expected real returns after inflation.

      


  • John Hussman: Fire Suppression

    In 1988, Yellowstone National Park went up in flames. In the worst catastrophe in the history of U.S. National Parks, nearly 800,000 acres of forest and surrounding areas were scarred by the uncontrollable blaze. The root cause of the inferno, as Mark Spitznagel recounts in his book The Dao of Capital, was fire suppression:


    “The spread of fire-suppression mentality can be linked to the establishment of forest management in the United States, such that by the early 1900s forests became viewed as resources that needed to be protected - in other words, burning was no longer allowed. The danger of this approach became tragically apparent in Yellowstone, which was recognized by the late 1980s as being overdue for fire; yet smaller blazes were not allowed to burn because of what were perceived to be risks that were too high given the dry conditions. And so smaller fires were put out, but in the end could not be controlled and converged into the largest conflagration in the history of Yellowstone. Not only did the fire wipe out more than 30 times the acreage of any previously recorded fire, it also destroyed summer and winter grazing grounds for elk and bison herds, further altering the ecosystem. Because of fire suppression, the trees had no opportunity or reason to ever replace each other, and the forest thus grew feeble and prone to destruction... In 1995, the Federal Wildland Fire Management policy recognized wildfire as a crucial natural process and called for it to be reintroduced into the ecosystem... Central bankers, too, could learn a thing or two from their forestry brethren.”

      


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