Monday, January 15, 2007

Hazardous Ovoboby! hussman

one thing is for sure. the risk management from hussman looks a little more complex. he really sticks to his plan not to buy and chase overpriced assets.

eines sollte klar sein. das risiko management von hussman ist zum glück wesentlich ausgefeilter.

We've got overvalued, overbought, overbullish conditions, coupled with upward pressure on yields. I'll just go ahead and give it a name: “Ovoboby.”

To convey some idea of the potential risks, I've assembled a very simple set of conditions that, taken together, have usually been followed by awful near-term returns, not to mention long-term disasters. Importantly, these conditions have been unfavorable even when earnings have been growing, interest rates have been reasonably low, and the prevailing trend of the market has otherwise appeared quite strong. ....

Hazardous Ovoboby
Overvalued
S&P 500 price/peak earnings greater than 18
Overbought S&P 500 at a 4-year high, and at least 5% higher than its level 6 months earlier
Overbullish
Investors Intelligence percentage of bullish advisors above 53%
Yield pressure
3-month Treasury yield higher than its level of 6 months earlier

Here is an exhaustive list of the instances where we've observed this set of conditions on a weekly closing basis ....(click on headline to see the very good list / auf die überschrift klicken um die gute liste zu sehen )

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