Hussman Predicts Sharp Stock Market Plunge

John Hussman, president of Hussman Investment Trust, predicts that the end of the current economic cycle will result in market losses of approximately 64% for the S&P 500 and 69% for the Dow. This according to a July article in MarketWatch. Hussman, known for predicting the market collapses of both 2000 and 2007-2008, is described as a “permabear” based on what the article calls his “oft-repeated mantra for ‘overbought, overvalued, overbulllish’ as the bull market… Read More

Lessons Learned Since the Financial Crisis

By John Reese (@guruinvestor) —  It’s been over a decade since the financial crisis that led to the deepest economic downturn since the Great Depression, one that pulled the financial rug—and jobs– out from under nine million people and led to foreclosures on approximately eight million homes. Berkshire CEO Warren Buffett—who was born in 1930—appreciates the lessons learned by both events, so much so that in the hallways of his company’s Omaha, Nebraska headquarters he… Read More

Bear Market Would Deliver Death Punch to Active Funds

A recent Bloomberg article warns that, while active fund managers are tempted by the thought that a market downturn would allow them to showcase their talents to investors—that a “human hand” is better than the ‘dumb’ passive funds that investors have favored—”it would actually be the worst possible situation for them and likely result in a messy and hurried consolidation of the entire industry like nothing we’ve seen before.” The article asserts that the such… Read More

Signs that a Bear Market May Be Coming

A recent article in Barron’s reports that while a flattening yield curve is “no reason to bail out of stocks,” bond yields could provide investors with “a sell signal in the years ahead.” A flattening of the yield curve occurs when short-term bond yields rise faster than long-term yields, which can happen, the article explains, if investors “think the Fed is making a mistake” in hiking interest rates and may have to reverse its course.… Read More

Hedge Funds Waiting for the Next Bear Market

“No  one is more eager for the next bear market than long-short hedge funds,” reports a recent Bloomberg article. These funds, the article explains, are not designed to keep up with the bull market. “Instead,” it says, “their ability to short stocks provides shelter during the occasional bear markets and by extension less volatility and higher risk-adjusted returns than the broad market over time.” Over the last nine years, however, these funds have lagged the… Read More

Shiller: Another Bear Market Could Happen

The kind of panic that ensure thirty years ago, on October 19th, 1987, could happen again. This according to Yale professor Robert Shiller in his recent New York Times article. While Shiller points out that regulatory and technological progress has ruled out an exact repeat of that day, the results of a survey he conducted within four days of the event revealed that “fundamentally, that market crash was a mass stampede set off through viral contagion.” … Read More

In a High Market, Investors Should Prepare for a Downturn

A recent article by Jeff Sommer of The New York Times poses the question: “Is this the top of the market? Is it time to sell?” “Simply put,” writes Sommer, “my answer is this: If you’re a stock investor, be prepared for a major decline, not because one is necessarily coming soon but because no one can predict where the markets are heading.” The article points out that the current economic expansion is the third… Read More

George Soros is Feeding the Bear

In recent years, 85-year-old billionaire George Soros hasn’t done much investing of his own. He has instead focused on public philanthropy and public policy (and is a large contributor to the super PAC backing Hillary Clinton). That changed earlier this year when he began spending more time directing trades at his firm Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family. Some close to him say that his resurfacing has… Read More

Sonders: Market Most Likely in Post-Echo Bull Phase

Liz Ann Sonders, chief strategist for Charles Schwab, outlines the four phases of the stock market over a full market cycle. Since 1960, the market can be seen following the four distinct periods: recession bear, post-recession bull, echo bear and post-echo bull. Recession Bear: these are the big bear markets, usually lasting a few years and averaging declines of 30%. The 2007-2009 bear market, as Sonders points out, fell by 54% so that was a… Read More

We May Be More Than Half through A Bear Market

Mark Hulbert writes in MarkWatch: “not infrequently, a bear-market declaration often amounts to little more than closing the barn door after the horses have left.” A bear market is typically defined by a 20% or greater decline in stock prices. In the last U.S. bear market (2011), for example, “the early-October day when the S&P 500 fell to 20% below its late-April high turned out to be the day that the bear market breathed its… Read More