If fund manager John Hussman has this week pegged correctly, his painful stretch of barking at the bull market could finally come to an end.
The president of Hussman Investment Trust once managed some $7 billion in assets after garnering street cred for nailing the tech bubble and the financial crisis. But his permabear status hasn’t played well over the past decade, and his Hussman Strategic Growth Fund HSGFX, +0.35% has seen its holdings drop below $300 million while lagging the broader market.
His flagship fund continues to struggle, down 14.7% so far this year, compared with a gain of 20% for the S&P 500 SPX, -0.37% , a 16.5% return for the Dow Jones Industrial Average DJIA, -0.22% and a nearly 25% rally for the Nasdaq Composite COMP, -0.37% over the same period.
Longer-term performance hasn’t been great either as the following table, culled from Hussman’s website, illustrates:
But Hussman, as he has for years, is sticking to his guns. In fact, he doubled down on his relentlessly gloomy outlook on Twitter TWTR, -0.49%, where he called this week “one of the most important in the lifetime of most investors.”
Hussman went on to explain why the market has never been more “overvalued, overbought, overbullish,” an alarm he has been sounding on a regular basis of late. He used this chart to illustrate his point:
In the 14th tweet of his epic tweetstorm on Monday, Hussman addressed those banking on a Fed rate cut to stoke the bull fire.
“Well, if you remember the 2000-2002 and 2007-2009 collapses, it should be clear that the Fed eased persistently and aggressively the whole way down,” he wrote. “When investors are risk-averse, risk-free liquidity isn’t an ‘inferior’ asset.”
He explained that how the stock market reacts to Fed easing depends on whether investors are leaning toward speculation or risk-aversion.
“The bottom line is that we have a hypervalued market, with the worst estimated prospective return for a conventional mix since the 1929 peak, divergent internals, extreme overextension, and oncoming recession risk,” Hussman wrote in summation. “Whatever you’re going to do, do it.”
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