No Such Thing as Risk?

30 juillet 2012

John P. Hussman, Ph.D.

The enthusiasm of investors about central-bank interventions has reached a pitch that is already well-reflected in market prices, and a level of confidence that with little doubt, investors will ultimately regret. In the face of this enthusiasm, one almost wonders why nations across the world and throughout recorded history have ever had to deal with economic recessions or fluctuations in the financial markets. The current, widely-embraced message is that there is no such thing as an economic problem, and no such thing as risk. Bernanke, Draghi and other central bankers have finally figured it out, and now, as a result, economic recessions and market downturns never have to happen again. Lire le reste de cette entrée »


Stratégie de Court Terme (09/05/2012):

9 mai 2012

Frédéric Gilbert

Un changement majeur s’est opéré le mois dernier, et a entrainé la rupture de la tendance haussière de court terme dans laquelle le Cac s’était installé depuis l’intervention de la BCE mi-décembre: le retour du risque politique. Les évènements récents, notamment en Grèce, marquent en effet le retour de facteurs négatifs sur la psychologie du marché. S’y ajoute une rupture technique depuis le franchissement à la baisse des 3250 pts. Ce mouvement baissier devrait conduire l’indice parisient aux alentours de 3000 pts à court terme (entre 2970 et 3050 grosso modo). Ce support – psychologique et technique – est important. Après presque 600 pts de baisse depuis les plus hauts, le retour des acheteurs sera le point à surveiller, étant donné l’abondance de liquidité hors marché. L’absence de volume et la cassure des 2950 pts entraineraient très certainement le Cac à 2800 pts (retracement exact de la première vague de baisse 3600 – 3100 pts). Lire le reste de cette entrée »

Is the Fed Promoting Recovery or Desperation?

9 avril 2012

John P. Hussman, Ph.D.

On Friday, the Department of Labor reported that March non-farm payrolls increased by 120,000, falling well short of consensus expectations in excess of 200,000. For our part, we continue to expect a deterioration in observable economic variables, with weakness that emerges gradually and then accelerates toward mid-year. On the payroll front, our present expectation is that April job creation will deteriorate toward zero or negative levels.

Immediately after the payroll number was released, CNBC shot out a news story titled « Disappointing Jobs Report Revives Talk of Fed Easing. » Of course it does, because this remains a market dependent on sugar. And with little doubt the Fed will eventually deliver it – perhaps following a market plunge of 25% or more – but with little doubt nonetheless, because like the indulgent parent of a spoiled toddler, the FOMC can’t stand to see Wall Street throw a tantrum without reaching for a lollipop. Lire le reste de cette entrée »

Wall Street’s fear gauge tells different tale

28 mars 2012

Financial Times

Investors who bought US shares at the peak of the market in October 2007 were back in profit for the first time for an hour or so on Tuesday morning, assuming reinvested dividends and no tax. The rise of the total return version of the S&P 500 to a new high comes as the market is on a roll, with share prices the highest since May 2008.

Bears are, not unreasonably, scanning for the signs of excessive confidence that usually herald the top of the market. The Vix index of implied volatility, Wall Street’s “fear gauge”, seems an obvious warning: it is at its lowest since June 2007, before the credit crunch began. Taken at face value it suggests that investors are far too sanguine. But something odd is going on with the Vix. Usually, as shares rise investors become more confident and want less protection against falls. This time investors are cautious, hedging by buying the Vix. Money has been piling into exchange-traded funds that buy Vix futures at a record rate. Lire le reste de cette entrée »

The Worst of Times to Buy Stocks ?

14 mars 2012


A leading fund manager sees conditions in today’s market that presaged past plunges. A « perfect storm » lies ahead, adds a technical guru.

When practitioners who take distinctly different approaches to analyzing financial markets come to similar conclusions, it behooves investors to pay attention, even if those conclusions clash with yours. John P. Hussman, who puts his Ph.D. in economics to work by heading the eponymously named Hussman Funds, thinks that the present ranks among what he calls « A Who’s Who of Awful Times to Invest, » along with such unpropitious periods as 1973-74, 1987, 2000-02 and 2007-09.

Walter J. Zimmermann Jr., who heads technical analysis for United-ICAP, a technical advisory firm, puts it more succinctly: « A perfect financial storm is looming. »

worst_cht Lire le reste de cette entrée »

« Do I Feel Lucky? »

14 mars 2012

John P. Hussman, Ph.D.

As of last week, the market continued to reflect a set of conditions that have characterized a wicked subset of historical instances, comprising a Who’s Who of Awful Times to Invest . Over the weekend, Randall Forsyth of Barron’s ran a nice piece that reviewed our case (the chart in Barrons has a problem with the date axis, but the original chart is in last week’s comment Warning: A New Who’s Who of Awful Times to Invest). It’s interesting to me that among the predictable objections to that piece by bullish readers (mostly related to our flat post-2009 performance, but overlooking the 2000-2009 record), none addressed the simple fact that the prior instances of this syndrome invariably turned out badly. It seems to me that before entirely disregarding evidence that is as rare as it is ominous, you have to ask yourself one question. Do I feel lucky? Lire le reste de cette entrée »

Warning: A New Who’s Who of Awful Times to Invest

5 mars 2012


John P. Hussman, Ph.D.

Last week, the estimated return/risk profile of the S&P 500 fell to the worst 2.5% of all observations in history on our measures. This is not a runaway bull market. Rather, it is a market that again stands near the highs of an extended but volatile trading range. I am convinced that the breakdown of the market from this range has been deferred only through repeated and extraordinary central bank actions.

Importantly, the market is again characterized by an extreme set of conditions that we’ve previously associated with a « Who’s Who of Awful Times to Invest. » The rare instances we’ve seen this syndrome historically are reviewed in that previous weekly comment. They include the 1972-73 and 1987 market peaks, and several instances since 1998. The more recent instances of this syndrome are shown by the blue bands on the chart below. Lire le reste de cette entrée »