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Hussman's Latest Commentary - lean 7 year of returns


stahleyp
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Nothing out of the ordinary here. I know he's not really known as a value investor, but I do think he's a pretty smart guy. His shareholders have been rewarded pretty nicely for the past decade giving the risks they were taking.

 

http://www.hussmanfunds.com/wmc/wmc101011.htm

 

Echoes Klarman's words a bit. Klarman stated that he believes the next 10 years will have negative or very low returns.

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  • 8 years later...

hasnt been 10 years yet but thus far klarman and hussman have been so far off the mark it is quite embarrassing. hussman now needs a 100% gain in his "growth" fund just to get back to even! i find this fascinating. perhaps the finest example of taleb's IYI

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Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect).

 

His story is one of the craziest about a money manager I've ever seen. Yeah, I'm cherry picking bear market bottoms for effect but it's still impressive.

 

From inception in 2000 to bottom of the market in 2002, a $10,000 investment in his fund would have been worth about $15,200 vs $5,900 for S&P 500.

 

From inception to March of 2009, his fund would have been worth about $20,500 vs $6,000 in the S&P 500.

 

From inception to date, his fund comes in about $10,100 vs S&P 500 at close to $30,500. Absolutely amazing!

 

 

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Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect).

 

His story is one of the craziest about a money manager I've ever seen. Yeah, I'm cherry picking bear market bottoms for effect but it's still impressive.

 

From inception in 2000 to bottom of the market in 2002, a $10,000 investment in his fund would have been worth about $15,200 vs $5,900 for S&P 500.

 

From inception to March of 2009, his fund would have been worth about $20,500 vs $6,000 in the S&P 500.

 

From inception to date, his fund comes in about $10,100 vs S&P 500 at close to $30,500. Absolutely amazing!

Wow, that is frickin crazy. And then you still have tons of people that spend time on macro and trying to time the market.

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Guest cherzeca

"Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect). "

 

why retrospect?  I read hussman 10 years ago and thought he was a permabear.  put him on ignore.  my return over the last 10 years beats his with 50% in ST low yield FI

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Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect).

 

His story is one of the craziest about a money manager I've ever seen. Yeah, I'm cherry picking bear market bottoms for effect but it's still impressive.

 

From inception in 2000 to bottom of the market in 2002, a $10,000 investment in his fund would have been worth about $15,200 vs $5,900 for S&P 500.

 

From inception to March of 2009, his fund would have been worth about $20,500 vs $6,000 in the S&P 500.

 

From inception to date, his fund comes in about $10,100 vs S&P 500 at close to $30,500. Absolutely amazing!

 

Hussman may be Smart, but he is a lousy investor. He got lucky in his in his career, but had been wrong ever since basically betting that the world goes to hell in a hurry. He is the financial snake oil salesman of the 21 century. It is obvious that investment process is flawed if cant capitalize on the GFC. Folks like Druckenmiller or Howard Marks who are certainly skeptical too, but are able to capitalize on opportunities as they see them are way better investors.

 

The problem that goes like Hussman (and Mauldin) have is that their views are part of their “branding” and they probably would see very adverse reactions from their investors, if they would change. Those static opinions are  a strong impediment to being a successful investor imo.

 

People should avoid everyone who claims of implies they have hey can predict how the future unfolds, as it will very likely be hazardous for their health, even if those prophets are right.

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Spending time on macro has worked very well for me. It has also worked well for Ray Dalio, Howard Marks, Soros, Buffett, Munger. We cannot use John Hussman as the only example.

 

Yeah I know Buffett says he does "pricing" and not "timing". But if he thought the market would go up for the next 10 years, he would not be sitting on 115 billion in cash. Can think of many Buffett-Munger quotes about waiting for buying opportunities.

 

Wow, that is frickin crazy. And then you still have tons of people that spend time on macro and trying to time the market.

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"Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect). "

 

why retrospect?  I read houseman 10 years ago and thought he was a permabear.  put him on ignore.  my return over the last 10 years beats his with 50% in ST low yield FI

 

I had put a small amount with Hussman, $10,000. I closed it early in 2010 because I was realizing he was a permabear and his fund wasn't going anywhere. I closed the account at $10,084!

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Ive long believed that if you want to invest with somebody, you want to invest with a guy who has a great track record of individual stock picks rather than some prescient macro calls. Making a big macro call once every dozen years gets you a ton of publicity that, even to this day, still helps guys like Paulson and Kyle Bass. But its smoke in mirrors and usually reflective of a failed strategy. Give me the guy who's picked 3 multi baggers or special situation plays with 100%+ IRR's in the past 5 years.

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"Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect). "

 

why retrospect?  I read houseman 10 years ago and thought he was a permabear.  put him on ignore.  my return over the last 10 years beats his with 50% in ST low yield FI

 

I wouldn't go so far as to say he's a permabear (well, not 100% of the time anyway...maybe like 98%). He had a tremendous record until 2010 or so. A lot of folks were bearish in 2010, like Klarman and Einhorn. He had I believe probably around $7 billion in AUM so he wasn't exactly unknown.

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Hussman is a smart guy but really missed the mark here (which is easy to say in retrospect).

 

His story is one of the craziest about a money manager I've ever seen. Yeah, I'm cherry picking bear market bottoms for effect but it's still impressive.

 

From inception in 2000 to bottom of the market in 2002, a $10,000 investment in his fund would have been worth about $15,200 vs $5,900 for S&P 500.

 

From inception to March of 2009, his fund would have been worth about $20,500 vs $6,000 in the S&P 500.

 

From inception to date, his fund comes in about $10,100 vs S&P 500 at close to $30,500. Absolutely amazing!

 

Hussman may be Smart, but he is a lousy investor. He got lucky in his in his career, but had been wrong ever since basically betting that the world goes to hell in a hurry. He is the financial snake oil salesman of the 21 century. It is obvious that investment process is flawed if cant capitalize on the GFC. Folks like Druckenmiller or Howard Marks who are certainly skeptical too, but are able to capitalize on opportunities as they see them are way better investors.

 

The problem that goes like Hussman (and Mauldin) have is that their views are part of their “branding” and they probably would see very adverse reactions from their investors, if they would change. Those static opinions are  a strong impediment to being a successful investor imo.

 

People should avoid everyone who claims of implies they have hey can predict how the future unfolds, as it will very likely be hazardous for their health, even if those prophets are right.

 

I'm not so sure he's a terrible investor. His unhedged portfolio from inception to the end of last year, on a $10,000 investment would have been about $43,000 vs $24,600 vs the S&P 500. Perhaps he is a terrible predictor of the future (as most are) but he has an very good record for actual stock selection.

 

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Ive long believed that if you want to invest with somebody, you want to invest with a guy who has a great track record of individual stock picks rather than some prescient macro calls. Making a big macro call once every dozen years gets you a ton of publicity that, even to this day, still helps guys like Paulson and Kyle Bass. But its smoke in mirrors and usually reflective of a failed strategy. Give me the guy who's picked 3 multi baggers or special situation plays with 100%+ IRR's in the past 5 years.

 

But then .... what does that guy need you for?

You just bring money; he has already has it, and the proven ability to generate a lot more ......

Best you can do is offer maybe a 2/20 arrangement, in return for ongoing 'reporting' ... to someone who really doesn't need it.

 

There are a great many extremely good investors who work in private partnerships, and who do so primarily because they just enjoy each others company. Often with some sort of an endowment fund tie-in, that covers the costs of an operating company doing something socially 'useful'. And a lot of those people outperform the relevant indexes, a great deal of the time.

 

SD

 

 

 

 

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Spending time on macro has worked very well for me. It has also worked well for Ray Dalio, Howard Marks, Soros, Buffett, Munger. We cannot use John Hussman as the only example.

 

Yeah I know Buffett says he does "pricing" and not "timing". But if he thought the market would go up for the next 10 years, he would not be sitting on 115 billion in cash. Can think of many Buffett-Munger quotes about waiting for buying opportunities.

 

Wow, that is frickin crazy. And then you still have tons of people that spend time on macro and trying to time the market.

I think you forgot Druckenmiller in that lineup of all time stars you posted, but yeah, obviously there will be exceptions. Just extremely difficult to tell whether it's luck or skill. Buffett sitting on plus 100B of cash has been a drag on performance (and still is - I think he has a really hard time shrinking his capital base), and I'm not sure Marks has been hitting it out of the ballpark either recently (I like his writings but from a practical point of view a lot of this macro thoughts are pretty useless I think).

 

Further, as for Buffett - his investment universe is very limited (and he's limiting himself - recent letter by Wedgewood I thought was quiet good). As for people without 100B I think there's plenty of stocks today that look much, much more promising than say 10 year treasuries or cash.

 

I believe a somewhat clever investor once said that more money has been lost worrying about the next recession than in recessions themselves.

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I'm not so sure he's a terrible investor. His unhedged portfolio from inception to the end of last year, on a $10,000 investment would have been about $43,000 vs $24,600 vs the S&P 500. Perhaps he is a terrible predictor of the future (as most are) but he has an very good record for actual stock selection.

 

Yeah, but isn't that like Adjusted EBITDA returns? He would've done great except for all the losses and bad stuff that actually happened...

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FWIW, I've followed Mr. Hussman as one of a multitude of inputs and would say that his comments may contribute to form an opinion about general valuation levels and where we may be in a cycle, if that's something of value to you.

 

At times, he seems to stretch his conclusions and the context of these 'mistakes' includes when he focuses on the technical, short-term and 'predictive' power of his analysis.

 

An interesting aspect is that, over the years, he has been able to 'predict' over the longer term (10 years or longer), the total return on stock indices (using similar methodology to Philosophical Economics) with a fair degree of accuracy although real results could deviate some in selected periods.

 

In 1999, Mr. Buffett submitted that he looked at the overall market sentiment on occasions and had described how there seemed to be a gap between investors' expectations and what he expected and that those expectations would be met if interest rates would go down and if profit margins would go up. In a recent survey (page 5, see document), it is reported that individual investors expect 11.7% annual return (above inflation). Mr. Hussman submits (he supplies his inputs, rationale etc) that investors should expect pretty much nil return for the next 10 years in the US. Of course, individually, one has to decide if this is a relevant input and, if it is, how an 11.7% return can be obtained.

https://www.im.natixis.com/us/resources/2019-individual-investor-survey-executive-overview

 

Note: An IYI, form Mr. Taleb's definition, seems to be someone who tells you what to do and has no skin in the game. Too clever by half may be more applicable here.

Note: When referring to Mr. Buffett's IQ and temperament comments, I thought he meant to have the ability to independently reach a conclusion and act upon it even if contrary to popular wisdom. But the first step is to be right :) and IMO that's why an investment board such as this one may be useful.

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I'm not so sure he's a terrible investor. His unhedged portfolio from inception to the end of last year, on a $10,000 investment would have been about $43,000 vs $24,600 vs the S&P 500. Perhaps he is a terrible predictor of the future (as most are) but he has an very good record for actual stock selection.

 

Yeah, but isn't that like Adjusted EBITDA returns? He would've done great except for all the losses and bad stuff that actually happened...

 

He may be a decent stock picker, but it still doesn’t change the fact that he is a lousy investor , if he frittered away his gains with hedges or selling too early. In the end, only $$$ count.

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Guest cherzeca

He will eventually be right and the market plunges.  ;D

 

this is the best post about Hussman.  the end is near.  permabear by another name.  you can be irrationally exuberant on the downside too

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Echoes Klarman's words a bit. Klarman stated that he believes the next 10 years will have negative or very low returns.

 

This really strikes me because it was so off the mark. It's so hard to predict these things. I personally worry about the next 10-years. With interest rates so low already, and the budget deficit in the US exploding, it seems like policy makers will have little ammunition to combat any broad economic weakness.

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