james22

Always be skeptical of loud mouths. Especially if they're after your money. This guy is not properly incentivized to give you good market forecasts (this is apart from the fact that I think macro forecasting is **** anyway). I'm skeptical anyone who reads Hussman would consider him a doomsaying loudmouth.

You believe being early is the same thing as being wrong, Jurgis? Well if timeframe for prediction is not specified, it is just invalid prediction. Hussman has always specified the time frame as the end of the market cycle. It wouldn't be if he provided the time frame for his argument. And yet he - as most pundits - hides behind "it will happen at some point". Are not arguments demonstrated right or wrong at the end of market cycles? Remember: The 2007-2009 collapse wiped out the entire total return of the S&P 500, in excess of risk-free Treasury bills, all the way back to June 1995. So if I tell you that KO will disappear as a company, you'll consider me a prophet even though I'll have to repeat (probably for couple decades) that "oh shucks, I'm early, but I'm not wrong"? If the collapse of KO will wipe out all its returns from today, sure. But, hey, the end of the current market cycle will demonstrate Hussman right or wrong. He'll be considered an oracle if one would have done better following his advice than holding the S&P500 and not if one would have done worse. Not much for him to hide behind.

You believe being early is the same thing as being wrong, Jurgis? Hussman's point: "actually no, it’s really not." Or at least, it wasn't then. Let's wait and see. (I was right on tech in the 90s. Why has my performance since then been worse?)

As one of the few who anticipated both the 2000-2002 and 2007-2009 collapses (and having shifted in 2003 to a constructive outlook in-between), what I thought the film [The Big Short] particularly got right was just how excruciating the wait was before the crisis unfolded, even for those who expected it (see, for example, my November 2007 weekly comment Critical Point). Though I don’t take leveraged positions in credit default swaps, or sell bank stocks short, even refusing to take equity market risk in the later stages of that bubble was excruciating enough. One had to suffer fools parroting things like “being early is the same thing as being wrong” until the collapse demonstrated that, actually no, it’s really not. The 2007-2009 collapse wiped out the entire total return of the S&P 500, in excess of risk-free Treasury bills, all the way back to June 1995. http://www.hussmanfunds.com/wmc/wmc160104.htm

BRK @ $125

BRK @ $127

You plan to continually rebalance? At no cost?

Paying a tenth of 1% to track a benchmark seems very, very cheap. Fund: https://personal.vanguard.com/us/funds/snapshot?FundId=5702&FundIntExt=INT ETF: https://personal.vanguard.com/us/funds/snapshot?FundId=0920&FundIntExt=INT

Vanguard's Energy fund (VGELX)

DFA...

BRK @ $130

Kyle Bass: there is a "massive opportunity in energy." "If you are going to allocate capital for the next three to five years, you should do it now" into the energy space over the next 6 months.

5% Energy (VGELX), Hell or high water.

Would anyone not buy if fell to buy-back? A Hussman fan, I'm half expecting a crash (and so might expect to be able to later buy at better than buy-back), but believe I'll always have to buy at buy-back.

Our portfolio manager Cale Smith has nearly all of his family’s life savings invested in the Tarpon Folio. https://www.islainvest.com/portfolios/

Thanks for this, sculpin. Interesting.

Why hold anything but your highest conviction? Because no matter how convinced by Hussman I might be, against the possibility of a not-crash I hold some defensive socks too, knowing they'll drop in a crash, but knowing they'll do better than cash otherwise.

Was it a mistake? We only see one version of history. The smart money bought at -50% in the Great Depression too, only to see another -80%. Fairfax (and Hussman) may have rightly played the odds and just just been beat by a lucky draw. Yes, it was 100% a mistake. I expected them to load up and they didn't. I admit my mistake. I shouldn't have made assumptions about what they would be doing, instead I should have sold it and just bought them all directly. I didn't say they made the mistake. I said that I made a mistake in remaining with FFH under the assumption that they were loading up. I effectively only had 50% of my capital in the stock market when I had imaginings of much, much more.. Sorry, gotcha. But while I'd think it a mistake to remain with FFH assuming they were loading up in last month's dip (they've been pretty clear that's not the opportunity they've been waiting for), I'd not think it your mistake in early 2009 unless they were as clear they wouldn't be loading up - what were they communicating then? Because if clear communication important, it might be a mistake remaining with them today if you believe they proved themselves unclear back then.

Was it a mistake? We only see one version of history. The smart money bought at -50% in the Great Depression too, only to see another -80%. Fairfax (and Hussman) may have rightly played the odds and just just been beat by a lucky draw.

I hold BRK, MKL, and FRFHF. And always consider BAM, L, Y, LUK, GLRE, and TPRE. I'd probably add to BRK and FRFHF today (quality, valuation) but not to MKL or BAM (valuation) or L, Y, LUK, GLRE, or TPRE (quality). Edited to add: I'd consider OAK and PSHZF too, but don't want to deal with K-1 and 8621 forms.

I agree with that. However you could make the exact same statement that you just made back in late 2007. Then 2008 came and the best thing that you could have done in late 2007, given Fairfax's thesis of overvalued markets, is to hold no equity whatsoever... including that of Fairfax. But you were relatively better off in FFH if the gun was put to your head to be in the equity markets. Fairfax works as a hedge for me both ways - relatively better off in a crash and better than cash otherwise. And I'd like to see Fairfax buying quality too, but I'm happy they didn't buy BRK at 1.27 P/B last month (for example) for the same reason I didn't: while quality at good value, given a thesis of overvalued markets, the best thing to do is to hold no equity whatsoever. This probably about right: http://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/watsa-on-share-buybacks/msg112515/#msg112515

Yup.

20% "pull back" ≠ sky falling I own Fairfax as a hedge against a 50% crash and so give them full credit for their conviction.

The velocity of money has turned lower… and since 2008 and 2009 when we started to see deflation, the Fed and other central banks have declared war, hell bent on wiping out deflation and foregoing debt deleveraging through massive QE. As of last month, inflation is zero. Some war! http://www.businessinsider.com/us-on-fast-track-to-deflation-2015-10

The world has been in a deflationary cycle since the collapse of Lehman Brothers Holdings Inc., evidenced by the euro, crude oil and a gauge of average commodities futures prices all peaking out in 2008, while risk-asset prices are merely buoyed by aggressive global monetary easing, Wakabayashi said. As the accommodative policy has failed to end global deflation and artificially inflated risk-asset values are running out of steam, the dollar’s strength is reminiscent of the yen’s appreciation that hurt the Japanese economy during decades of price declines, he said. “The U.S. will have to eventually resort to a weak dollar policy as deflation deepens,” Wakabayashi said. The Federal Reserve has held rates near zero since December 2008 to boost the economy through the worst recession since the Great Depression. “It’s obvious the U.S. is headed for deep deflation, hurt by the strong dollar,” said Wakabayashi, 72. “The Fed raising rates in this environment is not only ridiculous but harmful. U.S. stocks are plunging, not because of the prospect of a Fed rate hike, but to prevent it.” http://www.bloomberg.com/news/articles/2015-10-01/strategist-known-as-mad-dog-says-yen-can-climb-to-100-per-dollar