I want to begin with a few clarifications from last week. The first relates to my comments about what I called the “reckless myopia” of investors. Having underestimated the extent to which investors would respond to a predictable March-November 2009 lull in mortgage resets, credit losses, and economic difficulties by driving stocks back to overvaluation, a few observers quoted me last week as saying “I was wrong, because investors are stupid.”
That interpretation was funny, but not quite correct. Don't misunderstand – there are millions of decent, wise, prudent investors, and no shortage of talented, insightful analysts. They just evidently aren't sufficient to prevent recurrent bubbles and their subsequent failure.
In the movie Men In Black, Tommy Lee Jones says to Will Smith, “A person is smart.People are dumb, panicky, dangerous animals, and you know it.” Having observed the incomprehensible valuations of the late 1990's, the dot-com bubble, the housing bubble, the commodities bubble, and the private-equity bubble, all aided and abetted by investment professionals that by any standard of fiduciary duty or intellect should have known better; having observed the extent to which investors have celebrated the unethical commitment of trillions of dollars in public funds to make bank bondholders whole – the observation that investors as a herd are stupid stands wholly on its own.
Click to read the complete John Hussman Weekly Market Comment.
That interpretation was funny, but not quite correct. Don't misunderstand – there are millions of decent, wise, prudent investors, and no shortage of talented, insightful analysts. They just evidently aren't sufficient to prevent recurrent bubbles and their subsequent failure.
In the movie Men In Black, Tommy Lee Jones says to Will Smith, “A person is smart.People are dumb, panicky, dangerous animals, and you know it.” Having observed the incomprehensible valuations of the late 1990's, the dot-com bubble, the housing bubble, the commodities bubble, and the private-equity bubble, all aided and abetted by investment professionals that by any standard of fiduciary duty or intellect should have known better; having observed the extent to which investors have celebrated the unethical commitment of trillions of dollars in public funds to make bank bondholders whole – the observation that investors as a herd are stupid stands wholly on its own.
Click to read the complete John Hussman Weekly Market Comment.
