Hussman Funds: S&P 500 Fair Value Below 800?
I would encourage you to read this. Here is one little nugget ....investors should not rule out an S&P 500 trading in the 700-800 range in the years ahead as a reasonable (not catastrophic) probability.
While I think 800 is unlikely I think it would be viewed as catastrophic. As a function of how markets usually work, a 33% drop so soon after a 50% drop is a stretch for me. There is nothing that says the market has to ever value the way he says but a more likely scenario, IMO, would be a long stretch where markets make no real progress but earnings increase. This has been the case with Walmart.
While I am not a buyer of WMT, bulls note that the stock has gone nowhere in the last five years while earnings have about doubled (anyone feel free to put WMT's actual earnings growth in the comments, I am going by memory).
Wikinvest Wire
10 comments:
"There is nothing that says the market has to ever value the way he says but a more likely scenario, IMO, would be a long stretch where markets make no real progress but earnings increase."
So earnings for the S&P, which are at historical highs, just keep at a record pace forever in your scenario. Good luck with that.
He's done the research. You haven't. His fund is ranked in the top 1% for risk-adjusted returns. Yours is...?
Anyway, everyone is entitled to an opinion.
Why is this a surprise? The SP500 is roughly where it was in 1998.
That's already some years.
You are only in trouble if the SP index is your only investment.
For many, esp on this blog, this is simply not the case.
Don't worry, be happy.
g
In addition, his fund is in the FIFTH quintile for the last 3 yrs.
Even Hussman has said that PE ratios don't offer much for timing. I never said they have to keep at a record pace. further when you say record what do you mean? PE's may not be low but they are not at record highs.
My post is about what I see as the probablity for an S&P 500 going below 800.
That I read him and have cited him on this blog many time in the past is evidence that I think he is smart and that I care about what he has to say.
That does not mean that he will be correct in terms of magnitude.
If you agree with everything he says I would encourage you to explore differing opinions if only to strengthen your own beliefs.
hey George,
TY
And that is relevant HOW, George?
PE ratios and earnings are not the same concept Roger. You should know that.
i asked you what you were referring to, earnings or PE's.
I still don't know.
The relevence of George's comments, to me, would be that there have been times where Hussman has been hedged in such a way that he missed portions of rallies.
It is perfectly ok that he has missed portions of some rallies but it speaks to the diffiuclty for his work to time moves in the market.
This does not make the fund any less useful nor does it make him any less smart. No manager or strategy can be right all the time he is no exception and I still read him faithfully.
You seem upset that I would ask questions about his method or conclusions.
Let's not be disingenuous.
You said:
"Even Hussman has said that PE ratios don't offer much for timing. I never said they have to keep at a record pace. further when you say record what do you mean? PE's may not be low but they are not at record highs."
So YOU were taliking about PE ratios, not me. You never asked me to distinguish what I was saying, unless it was the term "record". I had said:
"So earnings for the S&P, which are at historical highs, just keep at a record pace forever in your scenario."
Is the word "PE" anywhere in there? Clearly I am taking about earnings which, as I posit, are at historical highs.
Hussman does not "time moves in the market". His weekly commentary makes this clear. If you think his is a timing fund then you don't understand it.
If he trails for periods, he trails for periods. SO WHAT? His objective is not to participate in every market move, only the sustainable ones. So the SP500 moved up 5%+ early this year. Where is it now? Where is Hussman's fund in relation? Not that it means anything, which it doesn't.
So you have your opinion on SP500 levels in the future, and Hussman has his research and conclusions, which look pretty solid to me.
It was not clear to me.
I never said it was a timing fund. He talks about valuations of the market which, hello?, is why I read him and cite him a lot on this page.
That he is not making short term calls is exactly my point.
I own the Hussman Strategic Growth Fund as a part of a nutritious balanced breakfast. It is a stabilizing influence. It goes up in up markets and flat in down markets. Neat trick.
Fred
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