"As of last week, the Market Climate for stocks remained characterized by overvalued, overbought, overbullish, rising-yield conditions that have historically been hostile for stocks. Both Strategic Growth and Strategic International Equity remain tightly defensive. A variety of outcomes could, in combination, clear this condition sufficiently to warrant some exposure to risk - most likely moderate and transitory in the near term - but at present, the expected return/risk tradeoff in the equity markets is poor."
One week, once again, John Hussman issued the above bearish assessment. In this week's market commentary, he also discussed the following most important rule of investing:
Since the early 1980's, I've examined and tested an enormous range of analytical techniques and investment rules, including various versions of "Don't fight the Fed," and "Don't fight the tape." If I had to choose between only these two, "Don't fight the tape" would win, hands down, as Fed-based investment approaches typically endure excruciating drawdowns - even those that succeed in slightly improving long-term returns. That said, there are numerous refinements that perform far better than these simple rules-of-thumb; especially those that reflect broader considerations such as valuation, sentiment, economic pressures, yield trends, market internals, and so forth. If I had to pull a single rule from these combinations, one particular admonition - "Don't take risk in overvalued, overbought, overbullish, rising-yield environments" - is one of the single most important in terms of avoiding major, sometimes catastrophic losses.
Read the full text of Hussman's weekly market commentary here.
One week, once again, John Hussman issued the above bearish assessment. In this week's market commentary, he also discussed the following most important rule of investing:
Since the early 1980's, I've examined and tested an enormous range of analytical techniques and investment rules, including various versions of "Don't fight the Fed," and "Don't fight the tape." If I had to choose between only these two, "Don't fight the tape" would win, hands down, as Fed-based investment approaches typically endure excruciating drawdowns - even those that succeed in slightly improving long-term returns. That said, there are numerous refinements that perform far better than these simple rules-of-thumb; especially those that reflect broader considerations such as valuation, sentiment, economic pressures, yield trends, market internals, and so forth. If I had to pull a single rule from these combinations, one particular admonition - "Don't take risk in overvalued, overbought, overbullish, rising-yield environments" - is one of the single most important in terms of avoiding major, sometimes catastrophic losses.
Read the full text of Hussman's weekly market commentary here.
