Recent Hussman Market Report - What?!

[whitedragon]

So, I wasn't sure whether to put this in the "Anti-Mustachian Wall of Shame" for being silly, or here because well maybe there is some nugget of wisdom in this and I'm too dumb to figure it out.

One of my co-workers forwards me these things all the time, and honestly they all seem like they are constantly "doom and gloom".  How does anybody have any confidence to put money in the market reading garbage like this all the time?  (And I ask this as a layperson, not as an enlightened mustaschian taking charge of my own fiscal destiny) 

Or am I missing something fundamental? 

Facepunch required?

The actual article in question:
http://www.hussmanfunds.com/wmc/wmc140908.htm

EDIT: Full article text removed in accordance with Hussman Reprint Policy

[superannuationfreak]

http://www.etf.com/sections/index-investor-corner/23004-swedroe-why-care-what-hussman-forecasts.html

[AZryan]

This garbage comes out when the market is doing great. You can't cry DOOM right after a crash, right?

So, the chart of the S&P 500 in that link clearly shows that the market is going to crash...... in 2013. But it didn't. That should tell anyone today that no one predicted shit or knows what's gonna happen year by year.

We call overvalued Market peaks 'bubbles', but the equally-pointy floors of crashes are also bubbles -which is why Stocks immediately start steeply climbing right back up.

The real value is a nice, smooth line going up about 10% a year.

Short term -it's nothing like that. Long term -that's what you'll get. This should be teachable in like 5 minutes to any adult willing to learn from known facts.

So, I guess I don't get the worry? Can't you show your friend how the 'jaggy, uppy lines' reverse all the 'downy, bummer lines' and give you all your money back, and then some? And there's pretty much always a christmas bonus every year that the chart doesn't show.

Tell 'em, "It's what filthy rich people do, and those chumps work money like the Navy works yer Mom."
Then, duck right when he swings, and tell 'em you saw that comin', too.

The Shiller PE Ratio looks back at the past 10 years to kinda gauge market value. It's at ~26 now. That's high, but not insane high. It's a bright warning sign, though IMO.
The market's avg. Bull run is like ~3.8 years, I think? We're at ~6-ish? So, we're statistically due for a fall -another warning sign.
But the longest Bull was like ~9+ years, and you don't know what's gonna happen next, so you just ride it long term and ignore the shit out of it if it does temporarily crash -or shove some more money up it if you got any spares sitting around.

The stats are that less people are in the market after the 2008 crash than were in it before. So maybe people had to cash out, or some got scared, but clearly few saw the crash as a golden time to dive in.
"Buy Low, Sell High." It's the simplest bit of investment info that everyone already knows. They just need to learn that it totally works, and long term you'll get ahead as long as there's like about a decade at least between the buying and the selling.

Sorry, just a long rant about this sort of thing.

[innerscorecard]

I try my best to ignore "macro porn" purveyors like Hussman. They're quite irrelevant as they don't actually make money anyways.

[whitedragon]

Thanks for confirming what I was already thinking guys!

And AZryan, these guys are firmly entrenched in their "beliefs" and all that.  Every time I try to point out something, they respond with either more doom and gloom articles, or the one fellow gets huffy and tells me "If you're so confident then, you should take out a million loans on your house and put them towards the market and put your money where your mouth is!"

It's really grating but for appearances sake I try to be cordial, and I just don't bring this stuff up anymore.

[hodedofome]

Hussman is very smart and some of the stuff he writes about is pretty enlightening. However, he's been dead wrong since 2009 and his funds reflect that. Through most of the first decade this century, it would have been beneficial to invest with him. However he's been fighting this bull market every step of the way. His models are obviously not compatible with the current environment and he's unwilling to change them.

This is an issue with just about every fundamental model you can come up with. The fundamentals change, the model is too optimized to past data, and it breaks.

[RichMoose]

The big problem with Hussman is that he has to write these articles so people stay invested in his "bear funds". It's easy to say that you should have invested in T-bills from 1996 - 2009, but if you consistently purchased index funds throughout this time period you would've benefited nicely from DCA and be enjoying a relatively low weighted average share price today, and be making a higher return in dividends alone than 10 year Treasury notes are giving right now. If this was 1989, Hussman would be telling your coworker how much better he would be to put his money in T-bills because they outperformed the market for the last couple years. Then you coworker would've missed out on 1990's market boom.

I like Hussman's sense of humour though, especially the graph pointing to current market "Obviously not a bubble > Obviously no consequence".

Your coworker needs a big massive facepunch and maybe he will stop reading this crap. Tell him to use an online calculator to figure out how much of his income he needs to save to retire at age 65 when his returns are about 0.5% higher than inflation.

[foobar]

This garbage comes out when the market is doing great. You can't cry DOOM right after a crash, right?

The best time to cry doom is right after the crash. In years like 1999 people don't take the bears seriously. In late 2009 and 2010 everyone remembered what 2008-early 2009 was like.