The Hussman Funds continue to pursue a historically-informed, value-conscious,risk-managed investment discipline focused on the complete market cycle. From thestandpoint of a full-cycle discipline, it is essential to understand the current position ofthe market within that cycle.
Only a handful of instances in history – 1929, 1972, 1987, 2000, and 2007– match the syndrome of overvaluation, lopsided bullish sentiment, and overboughtmulti-year equity market speculation as extreme as we observe today. Every instance was somewhat different, of course. For example, on measures that we find most strongly related with actual subsequent total returns, large-capitalization stocks were more extremely overvalued in 2000 than today (primarily because of breathtaking valuations in the technology sector), whereas the median stock is overvalued to a greater degree today than in 2000, making present concerns much more broadbased. Continue Reading »