You probably made some money from the ads in your site. Multiply that by 2000x, every single day. Its well known that media/information sites do better in bear markets(CNBC ratings soared in 2008). He WANTS things to be bad so he can make more money off the ads, he will even lie and mislead others if he has to. Dude has no integrity(no surprise given his history)
I disagree that a mutual fund like Hussman should be benchmarked against a stock/bond portfolio. I find this suggestion bizzare given all the regulations in terms of what he can do are(If he was a hedge fund it would be a different story) Plus his bond fund has also beat its benchmark(7% compounded since inception) So he beat BOTH benchmarks in terms of stock picking and bond picking
I think you are rather too sanguine about the macro picture - in particular I view the market environment since 2000 as a secular bear implying a different skew of average outcomes than the 80s-90s bull. The evolution of valuations (Shiller PE) over the period supports this conclusion, as does the price action. Federal Reserve actions have clearly gone beyond the 'normal' easing/tightening cycles, etc. Nevertheless from a short-term trading perspective I agree that the thing to do here is BTFD.
In the main Hussman's mistake was to badly underestimate both the effects of Fed intervention and the determination of the Fed to support stock prices. Quite honestly it's hard to fault him for this; the post-2008 interventions are after all unprecedented. Every rally since 2009 has correlated with QE or some type of money-printing, significant declines in 2010 and 2011 began almost immediately once this support was withdrawn. Hussman was always straightforward about his investment methodology and what risks he would and would not take, anyone who wished to embrace risk during these periods (or indeed in early 09) could have moved their money elsewhere. My main problem with Hussman is not actually that he missed the 2009 bottom, but rather that he lost a fair amount in 2008 despite predicting it, and has since been unable to find a way to avoid drawdowns during 'risk on' phases.
Sorry that's not exactly true - a diversified stocks/bonds portfolio will not get crushed in a high inflation environment, due to huge outperformance by the foreign stock portion as the local currency gets hit. Also, all you have to do is throw in 10-20% gold and you will actually perform very nicely in the scenario you described, albeit at cost of somewhat lower returns during low inflation periods. The salient fact is that a properly constructed passive ETF portfolio, without any hindsight benefit, totally crushed Hussman's performance (both total performance, and risk-adjusted) whilst not charging a 1% annual management fee. One can also easily postulate all kinds of scenarios where Hussman's relative performance is terrible (which it already has been for the better part of a decade) e.g. a decade like the 1980s or 1990s where stocks just keeping going up and Hussman stays fully hedged. Since 2004 Hussman has under-performed cash. His biggest drawdown was about 13% from that graph. You would have done better on a risk-adjusted basis in T-bills or Notes, or something conservative like 30% stocks 30% T-Notes 30% TIPS 10% gold, or Harry Browne's Permanent Portfolio. Look at his performance - 5 year negative return. Underperforming the S&P since 2004. Underperforming US treasuries since inception. And charging 1% per annum for the privilege. How does this prove his model is any good at forecasting recessions? If it was, he would have been up massively in 2007 and 2008, and would have loaded the boat in 2009, and both dips in 2010 and 2011. Fact is, his recession-predicting record is a coin flip, as shown by his track record of calls (2 out of 4) and his performance (3 good years then 8 years of nothing). Hussman is just another guy with a naive, unproven, simplistic quant theory of the markets which doesn't work. Check out Hulbert's Report on his performance if you think I am being biased.
Ok firstly this came from a contention that he has some kind of predictive model for recessions. There's no evidence of that at all, from his performance. So, case closed. Second, his whole model is based on combining valuations with market climate. Thus even if he thinks valuations are poor, if the market climate is supportive then he should have on a decent amount of exposure. Yet in the bull market phases since 2004 he has had minimal exposure. So, either his market climate assessment doesn't work (highly likely), or it works and he doesn't use it. If half his model doesn't work, then what are you paying for? His ability to judge valuations? Which led him to have on minimal exposure in late 2008 and early 2009 when there were corporate BONDS yielding 30% per annum, and numerous stocks selling below their net cash liquidation value? Please. Hussman is at best average at valuing stocks, and has no demonstrable market timing ability. There's no evidence he is likely to outperform a passive indexed portfolio constructed to a similar risk profile. That is not worth 1% per annum in fees.
Okay fair enough, though there are also a number of assumptions in there. In a global stagflation environment -- imagine China decelerating to 5% growth, or even 0% if their infrastructure shenanigans are backed out, even as US interest rates rise -- there may be no foreign boltholes in which to hide, and gold stocks are hardly a blanket panacea (with question as to whether a "typical" fund would even be allowed to heavily overweight gold stocks or GLD). Overall I'm happy to concede Hussman skews mediocre -- I'm just not convinced his stuff is worthless.
Indeed and this is why I don't invest in Hussman's stock fund, although I respect his analysis. You don't need to pay somebody 1% to tell you valuations suck, and I can almost certainly do better during the interim periods. At the same time I find value in understanding why Hussman has underperformed. It tells us that the current market is a historical aberration, marked by speculative 'risk on' phases that are so far correlated entirely with historically-unprecedented Fed stimulus measures. It's important to accept this if one wants to realize gains during these periods (or at the very least avoid losses due to shorting, etc.), but the risk side of Hussman's analysis - that the gains during these phases will prove ephemeral - has so far been pretty spot on. His 'crash calls' have to my knowledge always panned out - they did so in 2000, 2007, 2010 and 2011. Remains to be seen whether 2012 will turn out the same way, but note that not only have the CB money-supply expansion measures been temporarily halted with the last LTRO, S&P earnings also appear to be under pressure. Risk is high by my reckoning.
COMMITTEE DETERMINES AUCTION TO BE HELD ON MARCH 19 I'm curious which bond they will auction and how the exchange will influence the price of it
ISDA has published the list of deliverable bonds on its website. The 2042s were the CTD, last I checked.