A Who's Who of Awful Times to Invest / Hussman

Interesting list from Hussman. Too bad that you never hear such statistics on the MSM and it is always a good time to buy......Click on the headline to read the entire Piece.

Mal wieder Zeit etwas Wasser in den Wein zu gießen. Klickt bitte auf die Überschrift um den kompletten Bericht von Hussman zu lesen.

December 1961 (followed by 28% market loss over 6 months)

January 1973 (followed by a 48% collapse over the following 20 months)

August 1987 (followed by a 34% plunge over the following 3 months)

July 1998 (followed abruptly by an 18% loss over the following 3 months)

July 1999 (followed by a 12% loss over the following 3 months)

December 1999 (followed by a 9% loss over the following 2 months)

March 2000 (followed by a 49% collapse in the S&P over the following 30 months)

The defining characteristics of these instances were:
1) price/peak-earnings multiple above 18

2) 4-year high in the S&P 500 index (on a weekly closing basis)

3) S&P 500 8% or more above its 52-week moving average (exponential)

4) rising Treasury and corporate bond yields

Depending on how we define the interest rate trends, we can include two additional historical instances of these conditions: October 1963 and May 1996, both closely followed by 7-10% corrections.

One more instance completes the list: July 2007.

....It's extremely important to emphasize that I am not making a forecast or a “bearish call.” ....

The point of this analysis is instead to emphasize that based on prevailing market conditions, we have no evidence on which to accept market risk here. There is no need to forecast a decline – it is enough that, on average, the market has lagged Treasury bills in conditions similar to the present (though the skew, depth and abruptness of the historical losses in this case are striking). No evidence to take market risk, no market risk taken. It's that simple. ....

Frankly, I don't know whether investors will drive the market even higher in the weeks ahead. My opinion is that whatever gains emerge (and indeed, much of what has already emerged) will ultimately prove quite temporary. What I do know is that certain factors have reliably identified egregiously bad times to accept market risk, and that every historical instance similar to the present has been a disaster. The current instance may very well prove to be the exception, but I do not invest shareholder assets on the hope that the future will be entirely at odds with all available historical evidence. .....

The Mr. Magoo Market / Comstock

Funny that this survey is just coming out during times when the indices are hitting new (nominal) highs. But this is just one more example that this market is "slightly" decoupling from fundamentals and is enjoying the ride on the monster liquidity wave. As always click on the headline to read the entire report from Comstock

Passenderweise kommt die Umfrage gerade zu Zeiten heraus wenn die Indizes neue nominale Rekorde in den USA erklimmen. Das zeigt aber einmal mehr das es momentan eine "leichte" Abkoppelung von Fundamentaldaten gibt und zur Zeit die gignatische Liquiditäts-Monsterwelle geritten wird. Wie üblich auch hier bitte auf die Überschrift klicken um den vollständigen Report zu lesen.

Hat tip to Steve Barry

It is also not likely that the economy will be bailed out by any strong growth in capital expenditures.

The Conference Board Business Confidence Index fell 8 points to 45 in the 2nd quarter, down from 70 two years earlier.

> from Wikipedia

Quincy Magoo is a wealthy, short-statured retiree who gets into a series of sticky situations as a result of his nearsightedness, compounded by his stubborn refusal to admit the problem

Even more disappointing was the fact that expectations of CEOs for their own industry over the next six months dropped 13 points to the lowest level since the 4th quarter of 2000 and that only 22% expected profits to increase.

Studies by Ned Davis Research indicates that falling business confidence is highly correlated with lower capital expenditures and falling earnings.