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: QE and the ECB - "Authorize" Is A Slippery Word

    Last week, the Swiss National Bank abandoned its attempt to tie the Swiss franc to the euro. For the past three years, the SNB has been trying to keep the franc from appreciating relative to the rest of Europe by accumulating euros and issuing francs. As the size of Switzerland’s foreign exchange holdings began to spiral out of control, Switzerland finally pulled the plug. The Swiss franc immediately soared by 49% (from 0.83 euros/franc to 1.24 euros/franc), but later stabilized to about 1 euro/franc. While numerous motives have been attributed to the Swiss National Bank, the SNB made its reasons clear: "The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified." In effect, the SNB simply did what the German Bundesbank wishes it could do: abandon the policies of European Central Bank president Mario Draghi, and the euro printing inclinations he embraces.


    A quick update on what we call our "joint parity" estimates of currency valuation (see our recent discussion of the Japanese yen in Iceberg at the Starboard Bow). Considering long-term purchasing power parity (which certainly does not hold in the short-run) jointly with interest rate parity (see Valuing Foreign Currencies), we presently estimate reasonable valuations of about $1.35 for the euro, and about $1.13 for the Swiss Franc - so after the wild currency moves of last week, we suddenly view the Swissie to be almost precisely where we think it should be relative to the dollar. At least one hedge fund and a number of FX brokerages were wiped out last week as their customers were caught with leveraged short positions against the franc. Data from the CME shows asset managers and leveraged money heavily short the euro (with commercial dealers on the other side), and by our estimates, the decline in the euro is overextended. That's a high-risk combination for euro shorts.

      


  • A Better Lesson Than This Time Is Different – John Hussman

    In June, we completed a very challenging transition in our methods of classifying market return/risk profiles. That transition started with my 2009 insistence on stress-testing our methods against Depression-era data, resulted in ensemble methods that were stronger across history than our pre-2009 methods, but failed to sufficiently capture certain bubble-tolerant features of those methods, and was completed when we adapted by imposing variants of those features as a set of overlays – largely relating to market internals, credit spreads, and other factors that I’ve often referred to as “trend uniformity.”


    You can see the effect of those overlays in the June 16, 2014 comment Formula for Market Extremes, with additional detail on this transition in Setting the Record Straight and Hard Won Lessons and The Bird in the Hand.

      


  • Weekly Guru Bargains Highlights: TOT, NOV, APC, FCX, HAL

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Total SA (TOT): Down 26% Since John Hussman (Trades, Portfolio) Bought In the Quarter Ended on 2014-09-30

      


  • The Line Between Rational Speculation and Market Collapse – John Hussman

    The Shiller P/E (S&P 500 divided by the 10-year average of inflation-adjusted earnings) is now 27, versus a long-term historical norm of 15 prior to the late-1990s bubble. Importantly, the profit margin embedded into the Shiller P/E is currently 6.7% versus a historical norm of just 5.4%. The implied margin is simply the denominator of the Shiller P/E divided by current S&P 500 revenues (the ratio of trailing 12-month earnings to revenues is even higher at 8.9%). As I showed in Margins, Multiples and the Iron Law of Valuation, taking this embedded margin into account significantly improves the usefulness and correlation of the Shiller P/E in explaining actual subsequent market returns. With this adjustment, the margin-adjusted Shiller P/E is now nearly 34, easily more than double its historical norm.


    This fact is important, because the Shiller P/E averaged 40 during the first 9 months of 2000 as the tech bubble was peaking. But that Shiller P/E was associated with an embedded profit margin of only 5.0%. Adjusting for that embedded margin brings the margin-adjusted Shiller P/E at the 2000 peak to 37.

      


  • Garmin Is Somewhat Expensive At These Levels

    In this article, let's take a look at Garmin Ltd. (GRMN), a $10.32 billion market cap company that provides navigation, communications and information devices for the aviation, marine, general recreation, automotive, wireless and OEM markets.


    Innovation and R&D

      


  • CH Robinson Worldwide Has Plenty of Room to Grow

    In this article, let's take a look at CH Robinson Worldwide Inc. (CHRW), a $10.64 billion market cap company that is a global provider of multimodal transportation and logistics solutions and has a network of more than 230 offices in North America, South America, Europe and Asia.


    Business model

      


  • T Rowe Price's Top Stakes for the Third Quarter

    In recent days hedge funds have been filing form 13-F, which is a quarterly report of equity holdings by filed institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC). In this article, let´s concentrate in one particular hedge fund and try to see the principal holdings in its portfolio. I will look into T Rowe Price Associates Inc.


    Recently, the fund reported its equity portfolio ended September. The total value of the portfolio amounted to $457.5 billion, down from $461.6 million disclosed at the end of the previous quarter. Consequently, the fund's equity market change value was negative 4.1 million in the last quarter. The filing revealed that at the end of September, the fund added 88 new positions to its equity portfolio and sold out 73 positions. The top ten portfolio holdings as of the end of the quarter represented 12.09%. The largest changes from previous 13-F´s fillings are in the Health Care and Consumer Discretionary sectors.

      


  • Market Valuations and Expected Returns – December 4, 2014

    In January 2014, the stock market benchmark S&P 500 lost 3.36% after an excellent 2013. The enthusiasm came back as the market gained 4.31% over February. In March, it was essentially flat. In April, it was about even for the whole month. In May, the market gained 2.1% and in June, the S&P 500 went up 1.91%. In July, the market went down by 1.51%. However, the market gained 3.77% over August, which was the second-biggest monthly gain since 2014. Throughout October, the market benchmark S&P 500 earned 2.32% after the decline of 1.55% in September. In November, the market went up by 2.45%.


    Despite S&P 500 went down by 1.32% on the first day of October, Billionaire investor Warren Buffett told CNBC on Thursday he bought stocks in Wednesday's big selloff. Buffett said he likes to buy stocks when they go down, not when they go up. “The more goes down, the more I like to buy.” He said he buys businesses that he thinks will be good for the next 50 years-such as the deal to buy the nation's largest privately held car dealership group, Van Tuyl Group.

      


  • 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.  


  • Caterpillar's Acquisitions and International Expansion

    In this article let's take a look at Caterpillar Inc. (CAT), the world's largest producer of earthmoving equipment and a big maker of electric power generators and engines used in petroleum markets and mining equipment.


    Acquisitions and international markets

      


  • Market Valuations and Expected Returns – November 11, 2014

    In January 2014, the S&P 500 lost 3.36% after an excellent 2013. The enthusiasm came back as the market gained 4.31% over February. In March, it was essentially flat. In April, it was about even for the whole month. In May, the market gained 2.1% and in June, the S&P 500 went up 1.91%. In July, the market went down by 1.51%. However, the market gained 3.77% over August, which was the second-biggest monthly gain since 2014. Throughout October, the market benchmark S&P 500 earned 2.32% after the decline of 1.55% in September.


    Despite S&P 500 declining 1.32% on the first day of October, billionaire investor Warren Buffett told CNBC on Thursday he bought stocks in Wednesday's big selloff. Buffett said he likes to buy stocks when they go down, not when they go up. “The more it goes down, the more I like to buy.” He said he buys businesses that he thinks will be good for the next 50 years, such as the deal to buy the nation's largest privately held car dealership group, Van Tuyl Group.

      


  • Weekly Guru Bargains Highlights: EC, LVS, BHI, PBR, NBL

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.

    Ecopetrol SA (EC): Down 32% Since James Barrow (Trades, Portfolio) Bought In the Quarter Ended on 2014-06-30  


  • Weekly Guru Bargains Highlights: PBR, DB, EC, BHI

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought them.


    Petroleo Brasileiro SA Petrobras (PBR): Down 23% Since Bestinfond (Trades, Portfolio) Bought In the Quarter Ended on 2014-06-30

      


  • 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.

      


  • Apache´s Portfolio Could Offset Potential Risks

    In this article, let's take a look at Apache Corporation (APA), a $32.97 billion market cap company, which is a large independent exploration and production company, which explores for, develops and produces natural gas, crude oil and natural gas liquids.


    Divestitures

      


  • Market Valuations and Expected Returns - October 3, 2014

    In January 2014, the stock market benchmark S&P 500 lost 3.36% after an excellent 2013. The enthusiasm came back as the market gained 4.31% over February. In March, it went up only 0.69%. In April, it was about even for the whole month. In May, the market gained 2.1% and in June, the S&P 500 went up 1.91%. In July, the market went down by 1.51%. However, the market gained 3.77% over August, which was the second-biggest monthly gain since 2014. Throughout September, the market declined 1.55%.


    The U.S. bull market has lasted for 67 months up until now, and it is the fifth longest bull market in history. The market went higher during the last few years despite concerns that the market has already reached the top, yet a recent fall had investors worried. Has the U.S. stock market reached the turning point?

      


  • 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

      


  • Paul Tudor Jones, John Buckingham and Jim Simons Long in Coach

    In this article, let's take a look at Coach Inc. (COH), a $10.21 billion market cap company that designs, makes and markets fine accessories for women and men, including handbags, weekend and travel accessories, outerwear, footwear and business cases.


    Key drivers

      


  • 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.

      


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