In any event, our most important time horizon is the present moment. At present, stocks are characterized by an overvalued, overbought, overbullish, rising yield profile that is generally coupled with poor average returns. Though the tendency is for the market to actually make marginal new highs for some amount of time following the emergence of these conditions, very steep and abrupt subsequent breaks are also the norm. Defensive positions in that sort of environment promise to be frustrating, because of that tendency for the market to creep to new highs, retreat a bit, and then press to marginally higher levels. Still, despite this tendency toward further marginal progress, the fog tends to be thick, and the cliff tends to be steep.
As for bonds, we have a certain amount of ambivalence. Treasury yields have risen substantially in recent weeks, and we certainly do not believe that Treasury securities are priced to deliver positive real returns after inflation over the coming decade. However, I also expect that we are at the threshold of fresh credit concerns, which will tend to put temporary upward pressure on the dollar and downward pressure on default-free Treasury yields. Based on the higher level of yields, there is some amount of speculative merit in modestly increasing Treasury holdings on price weakness, but this is clearly a short- to intermediate-term view rather than a view about the merit of holding to maturity.
Read the complete Hussman Weekly Market Comment.
Also check out:
As for bonds, we have a certain amount of ambivalence. Treasury yields have risen substantially in recent weeks, and we certainly do not believe that Treasury securities are priced to deliver positive real returns after inflation over the coming decade. However, I also expect that we are at the threshold of fresh credit concerns, which will tend to put temporary upward pressure on the dollar and downward pressure on default-free Treasury yields. Based on the higher level of yields, there is some amount of speculative merit in modestly increasing Treasury holdings on price weakness, but this is clearly a short- to intermediate-term view rather than a view about the merit of holding to maturity.
Read the complete Hussman Weekly Market Comment.
Also check out:
