In this week’s market comment, John Hussman repeated his call for a meek 6% annual average for long term stock market return for the next ten years. He challenges other Wall Street analysts who call otherwise to produce as extensive historical evidence:
And his view toward short-term is not very optimistic neither:
Read the full text of this week’s Hussman Market Comment.
To see Hussman’s complete long equity positions and trading histories, click:
http://www.gurufocus.com/ListGuru.php?GuruName=John+Hussman
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On the valuation front, we presently estimate that the S&P 500 is priced to achieve total returns over the coming decade of less than 6%. Though we use a variety of methods, the consensus estimate is at about 5.6% annually. I've detailed our estimation methodology in numerous weekly comments over the years. Below is a chart taking this analysis back to 1928. It would be nice, before quoting alternative valuation models, if Wall Street analysts would at least present similarly broad historical evidence that their methodology actually has a relationship with subsequent market returns. If a valuation opinion doesn't come with extensive historical evidence, it's noise.
And his view toward short-term is not very optimistic neither:
As of last week, the Market Climate for stocks was characterized by unfavorable valuations and mixed market action, coupled with still-negative economic pressures overall. From a technical standpoint, the market is displaying a specific set of trends and divergences that has often been associated with "whipsaw" reversals. Internal dispersion is increasing, which can be observed, for example in the relatively high number of stocks establishing both 52-week highs and 52-week lows. When this sort of dispersion is coupled with overvaluation and negative economic pressures (which we also observed, for example, in Nov 1973, June 1990, Nov 2000 and June 2008), the subsequent outcomes have often been quite awful. Once those conditions are all in place, one indication of immediate risk is a "leadership reversal" where the number of new lows predominates following a week where new highs predominate (though you sometimes see a couple of these events a few weeks apart near market peaks if prices are whipping around).
Read the full text of this week’s Hussman Market Comment.
To see Hussman’s complete long equity positions and trading histories, click:
http://www.gurufocus.com/ListGuru.php?GuruName=John+Hussman
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and John Hussman for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
