John Hussman

John Hussman

Last Update: 2014-11-10

Number of Stocks: 201
Number of New Stocks: 36

Total Value: $1,170 Mil
Q/Q Turnover: 24%

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

John Hussman Watch

  • John Hussman Purchases 36 New Stocks in Q3 2014

    John Hussman (Trades, Portfolio) is the president of Hussman Strategic Advisors, an advisory firm that manages the Hussman Funds. He manages the Hussman Strategic Growth Fund and the Hussman Strategic Total Return Fund, which invests primarily in U.S. Treasury and government agency securities.

    Every week, the investor publishes a commentary on the market that is widely read by money managers and individual investors alike. Hussman has written about a variety of topics, from monetary policy to market valuation.  


  • On The Tendency Of Large Market Losses To Occur In Succession – John Hussman

    Abrupt market losses typically reflect compressed risk premiums that are then joined by a shift toward increased risk aversion by investors. In market cycles across history, we find that the distinction between an overvalued market that continues to become more overvalued and an overvalued market is vulnerable to a crash often comes down to a subtle but measurable shift in the preference or aversion of investors toward risk – a shift that we infer from the quality of market action across a wide range of internals. Valuations give us information about the expected long-term compensation that investors can expect in return for accepting market risk. But what creates an immediate danger of air-pockets, freefalls and crashes is a shift toward risk aversion in an environment where risk premiums are inadequate. One of the best measures of investor risk preferences, in our view, is the uniformity or dispersion of market action across a wide variety of stocks, industries and security types.


    Once market internals begin breaking down in the face of prior overvalued, overbought, overbullish conditions, abrupt and severe market losses have often followed in short order. That’s the narrative of the overvalued 1929, 1973 and 1987 market peaks and the plunges that followed; it’s a dynamic that we warned about in real time in 2000 and 2007; and it’s one that has emerged in recent weeks (see Ingredients of A Market Crash). Until we observe an improvement in market internals, I suspect that the present instance may be resolved in a similar way. As I’ve frequently noted, the worst market return/risk profiles we identify are associated with an early deterioration in market internals following severely overvalued, overbought, overbullish conditions.

      


  • Air Pockets, Free Falls and Crashes – John Hussman

    “Abrupt market weakness is generally the result of low risk premiums being pressed higher. There need not be any collapse in earnings for a deep market decline to occur. The stock market dropped by half in 1973-74 even while S&P 500 earnings grew by over 50%. The 1987 crash was associated with no loss in earnings. Fundamentals don't have to change overnight. There is in fact zero correlation between year-over-year changes in earnings and year-over-year changes in the S&P 500. Rather, low and expanding risk premiums are at the root of nearly every abrupt market loss.


    “One of the best indications of the speculative willingness of investors is the ‘uniformity’ of positive market action across a broad range of internals. … I've noted over the years that substantial market declines are often preceded by a combination of internal dispersion, where the market simultaneously registers a relatively large number of new highs and new lows among individual stocks, and a leadership reversal, where the statistics shift from a majority of new highs to a majority of new lows within a small number of trading sessions.

      


  • John Hussman – The Ingredients Of A Market Crash

    “The information contained in earnings, balance sheets and economic releases is only a fraction of what is known by others. The action of prices and trading volume reveals other important information that traders are willing to back with real money. This is why trend uniformity is so crucial to our Market Climate approach. Historically, when trend uniformity has been positive, stocks have generally ignored overvaluation, no matter how extreme. When the market loses that uniformity, valuations often matter suddenly and with a vengeance. This is a lesson best learned before a crash rather than after one. Valuations, trend uniformity, and yield pressures are now uniformly unfavorable, and the market faces extreme risk in this environment.”


    Hussman Investment Research and Insight, October 3, 2000

      


  • John Hussman – The Two Pillars of Full-Cycle Investing

    Despite my reputation in recent years as a “permabear,” I’ve actually had quite a variable relationship with equity risk across three decades in the financial markets, and that relationship has always depended on market and economic conditions. It’s difficult to judge stocks as “good” or “bad” investments without reference to valuations and other factors. For example, after the 1990 bear market, I had a reputation as a “lonely raging bull” and advocated a leveraged stance in equities for years, based on a combination of reasonable valuation and strong market internals. While investors worried about weak consumer confidence, I frequently noted that weak confidence is correlated with strong subsequent market returns. It’s the combination of high confidence, lopsided bullishness, overvaluation and overbought multi-year advances that opens a chasm into which the market ultimately plunges. History is remarkably consistent on this point, and it requires discipline to avoid that damage. Reducing exposure to risk in these conditions is the first pillar of full-cycle investing.


    Accordingly, I was no fun at all by the 2000 market peak. It was impossible to justify equity valuations except on assumptions that were wholly outside of historical experience. We keep a talking Pets.com sock puppet in the office as a reminder of that bubble. A little squeeze and he says things like “Hey, you’re a good-lookin’ fella. I like your shorts.” By the time the 2000-2002 decline partially unwound the bubble, the S&P 500 had lagged Treasury bills all the way back to May 1996.

      


  • John Hussman’s Second Quarter 2014 Letter to Shareholders

    Dear Shareholder,


    The Hussman Funds continue to pursue a historically-informed, value-conscious, risk-managed investment discipline focused on the complete market cycle. From the standpoint of a full-cycle discipline, it is essential to understand the current position of the market within that cycle.

      


  • Broken Links: Fed Policy and the Growing Gap Between Main Street and Wall Street - John Hussman

    When the majority of Americans examine the world around them, they see a stock market at record highs and modest apparent improvement in the economy, but they also have the sense that something remains terribly wrong, and they can’t quite put their finger on it. According to a recent survey by the Federal Reserve, 40% of American families report that they are “just getting by,” and 60% of families do not have sufficient savings to cover even 3 months of expenses. Even Fed Chair Janet Yellen seemed puzzled last week by the contrast between a gradually improving unemployment rate and persistently sluggish real wage growth.


    We would suggest that much of this perplexity reflects the application of incorrect models of the world.

      


  • Dimes On Black and Dynamite On Red - John Hussman

    The stock market is presently a roulette wheel with dimes on black and dynamite on red. We continue to have extreme concerns about the extent of potential market losses over the completion of the present market cycle. At the same time, we have very little view with regard to short-term market action. If one reviews market action surrounding major pre-crash peaks such as 1929, 1972, 1987, 2000 and 2007, you’ll observe a sort of “resilience” in the major indices on a day-to-day and week-to-week basis even after market internals had already corroded. In 1987, for example, the break following the August bull market peak was largely recovered over the course of several weeks before failing rapidly in October. In 2000, the market actually experienced a series of 10-12% corrections and recoveries before a final high in September that was followed by a loss of half the market’s value. In 2007, the initial break in mid-summer was fully recovered, with the market registering a fresh nominal high in early October that marked the end of the bull market and the start of a 55% market collapse.


    As economic historian J.K. Galbraith wrote about the advance leading up to the 1929 crash, the market’s gains “had an aspect of great reliability… Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently, discredited.”

      


  • Market Peaks Are a Process - John Hussman

    “Regardless of very short-term market direction, it is urgent for investors to understand where the equity markets are positioned in the context of the full market cycle. While the most extreme overvalued, overbought, overbullish, rising-yield syndrome we define has generally appeared only at the most wicked market peaks in history, investors have ignored those conditions over the past year. We can’t be certain when the deferred consequences will emerge. But a century of market history provides strong reason to believe that any intervening gains will be wiped out in spades.


    “It’s instructive that the 2000-2002 decline wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, while the 2007-2009 decline wiped out the entire excess return of the S&P 500 all the way back to June 1995. Overconfidence and overvaluation always extract a terrible payback.

      


  • John Hussman's Wine Country Conference 2014 Presentation and Q&A

    John Hussman (Trades, Portfolio)'s Wine Country Conference 2014 Presentation and Q&A

      


  • John Hussman's Full Presentation from the Wine Country Conference

    Hussman doesn't do many conferences; the ones that he does do are usually related to charity.


    Therefore the video below is a rare chance to see a presentation from this respected investor and strategist.

      


  • Q&A with John Hussman - Wine Country Conference

    In the video below Mebane Faber leads a question and answer session with John Hussman (Trades, Portfolio).


    Interestingly while Hussman is very bearish he notes that it is impossible to know what will eventually drive a shift in risk aversion.

      


  • Exit Strategy - John Hussman

    The S&P 500 set a marginal new high on Friday, in the context of a broad rollover in momentum thus far this year that we view as likely – though of course not certain – to represent a broad cyclical peak of the sort that we observed in 2000 and 2007, as distinct from spike-peaks like 1987. Valuation measures remain extreme, with the market capitalization of nonfinancial stocks pushing 130% of GDP (relative to a pre-bubble norm of about 55%), the S&P 500 price/revenue ratio at 1.7, versus a pre-bubble norm of 0.8, and the Shiller P/E near 26 – which while lower than the 2000 extreme, exceeds every pre-bubble observation except for a few months approaching the 1929 peak. We presently estimate 10-year nominal total returns for the S&P 500 Index averaging just 2.3% annually, with zero or negative total returns on every horizon shorter than about 7 years.


    A side note about valuations and profit margins – my concern about record profit margins here is emphatically not centered on what profit margins may do over the next few quarters or years. The relationship between cyclical movements in earnings and stock prices is simply not very strong. Rather, as I noted in The Coming Retreat in Corporate Earnings, “my present concern is much more secular in nature. It can be expressed very simply: investors are taking current earnings at face value, as if they are representative of long-term flows, at a time when current earnings are more unrepresentative of those flows than at any time in history. The problem is not simply that earnings are likely to retreat deeply over the next few years. Rather, the problem is that investors have embedded the assumption of permanently elevated profit margins into stock prices, leaving the market about 80-100% above levels that would provide investors with historically adequate long-term returns.”

      


  • John Hussman - Setting the Record Straight

    With advisory sentiment running at 56% bulls and fewer than 20% bears, with most historically reliablevaluation metrics about twice their pre-bubble norms (and presently associated with negative expected S&P 500 nominal total returns on every horizon of 7 years and less), with capitalization-weighted indices near record highs but smaller stocks and speculative momentum stocks diverging badly, and with a Federal Reserve clearly intent on winding down the policy of quantitative easing that has brought these distortions about, we continue to view the present market environment as among the most dangerous instances in history.


    Major market peaks, even those like 2000 and 2007 that were followed by 50% losses, have never felt dangerous at the time. That’s why they were associated with exuberant price extremes. Sure, investors had a sense that prices had advanced a great deal, but endless reasons could be found to justify the advance. Avoiding major losses required an intimate familiarity with market history, and enough discipline and patience to maintain what Galbraith called a “durable sense of doom” about observable conditions. The general rule is that you don’t observe the “catalyst” in advance, only the stack of dynamite.

      


  • Cahm Viss Me Eef You Vahn to Live - John Hussman Weekly

    “Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to ‘earning power’ and assume that prosperity is equivalent to safety.”


    Benjamin Graham

      


  • Bearish Investor John Hussman's 5 Top New Stock Buys

    John Hussman (Trades, Portfolio), a market analyst and founder of the Hussman Funds, has a dire outlook for the markets, largely owing to Fed interference in them. He warned in his most recent weekly commentary:

    “The Federal Reserve has stomped on the gas pedal for years, inadvertently taking price/earnings ratios at face value, while attending to “equity risk premium” models that have a demonstrably poor relationship with subsequent market returns. As a result, the Fed has produced what is now the most generalized equity valuation bubble that investors are likely to observe in their lifetimes... The median price/revenue multiple for S&P 500 constituents is now higher than at the 2000 market peak. The average price/revenue multiple across S&P 500 constituents is now above every point in that bubble except the first and third quarters of 2000. The central message to investors with unhedged equity positions and investment horizons shorter than about 7 years: Prospective returns have reached zero. The value you seek from selling in the future is already on the table today. The future is now.”  


  • The Future Is Now - John Hussman

    “Even a return to median bull market valuations would be brutal for the most popular tech stocks. We’re not even talking about bear market valuations, and we’re making the leap of faith, contrary to the evidence, that the quality of current revenues is as high as those generated during the past decade. To illustrate the probable epilogue to the current bubble, we’ve calculated price targets for some of the glamour techs, based on current revenues per share, multiplied by the median price/revenue ratio over the bull market period 1991-1999.


    Cisco Systems: $18 ¾ (52-week high: $82)
      



  • Hasbro Continues its Profitable Streak

    Hasbro, Inc. (HAS) has been on the radar of many investment gurus like Paul Tudor Jones (Trades, Portfolio) and John Hussman (Trades, Portfolio) for some time now, given its position as the second largest toy manufacturer in the industry, only outranked by Mattel, Inc. (MAT). But the company’s first quarter earnings report showed that it could possibly outperform industry giant and rival Mattel in terms of growth, as Europe and Latin America registered 8% and 17% growth respectively, while Mattel saw declines in the same regions. Furthermore, quarterly earnings were driven mainly by the girls’ category, which sported a 20% increase in demand for My Little Pony, Equestria Girls, and Nerf Rebelle products. So, with profitability on the right track, what can investors expect from this industry player in the long term?

    Licensing agreements and emerging market growth  


  • The Federal Reserve's Two Legged Stool - John Hussman

    Nice article this week from someone who knows our work well - Jonathan Laing, the senior editor at Barron’s Magazine. He emphasizes our concerns about valuation and the need to account for the effect of profit margin variation, which can "make stocks seem beguilingly cheap at market peaks," duly observes our miss in this half-cycle (though stress-testing wasn't discussed), “after deftly side-stepping the dotcom- and housing bubble-crashes," and adds "We expect some vindication of his obduracy may lie ahead.” No argument here.


    One of the things that some forget is that we shifted to a constructive stance between those two crashes in early 2003, and initially moved toward a constructive stance after the market collapsed in late-2008 (see Why Warren Buffett is Right and Why Nobody Cares) until a parade of policy errors forced us to entertain Depression-era outcomes. My 2009 stress-testing miss and the awkward transition that resulted certainly injured my reputation during this uncompleted half-cycle. Still, having addressed that “two data sets” problem, I expect no similar stress-testing response in future market cycles. Meanwhile, I have every expectation that the current speculative extremes will end in tears for those inclined to dismiss hard, historically reliable evidence by mumbling “permabear.” On the bright side, the conclusion of the present cycle and the course of those that follow are likely to provide strong, extended opportunities to take aggressive investment exposure. Now would just be a particularly inopportune moment to do so.

      


  • After a Spate of Acquisitions, It’s Time for Profits

    Over the past few years, the leading media and marketing company in the U.S., Meredith Corporation (MDP), has made a point of purchasing company’s and brands that would enhance its interest in publishing, broadcasting, marketing, and interactive media. And although talks about acquiring Time Warner Inc. (TWX)’s Time magazine were unsuccessful, Meredith’s financial results and future outlook are still looking promising. While the current EPS growth rate of 6.3% is not stellar, management reiterated that the company’s acquisition load will contribute to the quarterly $302.1 million saved in operating expenses, due to a 1.4% decrease in production, distribution, and editorial costs.


    A Long Trail of Acquisitions to Boost Growth

      


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User Comments

Wal
ReplyWal - 6 months ago
How can you follow the investment methodology of Dr.John Hussman (Trades, Portfolio), when his fund has been loosing money for the past 5 years, and is rated 1 star only by Morningstar rating?
Am I missing something in here?
Traderatwork
ReplyTraderatwork - 8 months ago
S&P went up 100%+ in last 6 years,

Hussman fund last 5 years annual return is -3.5% EVERY YEAR!!!

Guru? Really?








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