Morningstar had a great interview with John Hussman of the Hussman Funds. As you can see from the titles of the videos, he is not to optimistic about the current valuations of the stock market. Hussman comments that the currently market is "significantly overvalued" and expects the market to return 7% for stocks. The reason for the bleak outlook is due to the same reasons that led to the initial downturn in the economy. For example current 10 year yields have fallen from 4% to 3%, credit spreads opening up again, and the stock market at a lower level than 6 months ago.
"The market's expectations by Wall Street analysts, for instance, implicitly imply profit margins that are among the highest levels in history, and I think that's a dangerous thing to build into one's valuation assumptions."--John Hussman:
Hussman: The Market Is Significantly Overvalued
Hussman: Expect 7% Annual Total Returns in Stocks
Hussman: We Haven't Fixed the Mortgage Problem
Hussman on the Risk/Reward Trade-Off for 30-Year Treasuries
"The market's expectations by Wall Street analysts, for instance, implicitly imply profit margins that are among the highest levels in history, and I think that's a dangerous thing to build into one's valuation assumptions."--John Hussman:
Hussman: The Market Is Significantly Overvalued
Hussman: Expect 7% Annual Total Returns in Stocks
Hussman: We Haven't Fixed the Mortgage Problem
Hussman on the Risk/Reward Trade-Off for 30-Year Treasuries
