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leaderoftheback (85.38)

Like John Hussman, I don't know what to do either!

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December 28, 2013 – Comments (7) | RELATED TICKERS: HSGFX

Doc Hussman has proven himself right on the money in his 2007 letter; low single digit returns in the coming years (this is a pre-crash letter).  Continuing my annual review of old writings, I find Mr. Hussmans 2009 letter.  He's lookin' pretty good.  His HSGFX is killing it for all the reasons he warned us about in  2007.   

 

Now as the years are passing, and thankfully the world did not end in 2009, we continue with our low annualized returns, but his HSGFX is being crushed.  It makes him look like a dummy.  So how can he be so right and then do the wrong thing based upon that right-ness?

 

It's a fair question as I try to figure out how to prepare for what's ahead.  We can see what's there, but we can't tell how far off.  Bummer. 

7 Comments – Post Your Own

#1) On December 28, 2013 at 2:29 PM, awallejr (81.13) wrote:

Well I started making money when I decided to stop listening to everyone except Uncle Ben Bernanke.  But with his leaving I have to see if I can follow Aunt Janet Yellin with the same success.

I don't expect to change my strategy much.  While I see interest rates rising, not so much as to make a big difference, however.  10 year Tbills at 3-4% still doesn't compete with mlps, bdcs, reits (excluding mreits) yielding 8-12%.

As for mreits, I always argued that you have to watch interest rates when holding them.  I'd rather stick with BDCs.  

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#2) On December 28, 2013 at 2:43 PM, leaderoftheback (85.38) wrote:

Good luck with your strategy.  Everybody needs one.  Maybe not stick with it too long, though, Dr Hussman.  

I have noted his performance on that printout and will look at  it again a couple years from now.  He might yet be absolved.

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#3) On December 29, 2013 at 10:04 AM, MKArch (99.72) wrote:

I don't follow Hussman however it sounds like he might be in the perma bear camp. If so you can attribute his record to the stopped watch theory.

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#4) On December 30, 2013 at 4:32 PM, leaderoftheback (85.38) wrote:

Hi MK- I'd really suggest you look the letter up.  Yes, he's probably in the permabear camp, but this letter is clearly not of the broken clock variety.  He lays out his evidence and he has proven himself correct.  The point of my post though, is even if we have some certainty in underlying data, it's what we do with the information that matters.  He has not created a successful strategy for his growth fund, but that doesn't mean his data were wrong...just what he did with it.

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#5) On December 30, 2013 at 8:15 PM, MKArch (99.72) wrote:

Hi LOB,

I'm sure he was right for the right reasons in 2007 however it sounds like he was in the camp calling for a new great depression that would take a decade to even begin recovering from and are now reduced to conspiracy theory's about how the FED scewed up their long term investment thesis but they'll be right eventually. Which of course they will; just like the stopped clock. Just because reality periodically coincides with dogmatic ideology doesn't make make dogmatic ideologist great prognosticators. 

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#6) On December 30, 2013 at 8:35 PM, awallejr (81.13) wrote:

Well that is why I said in comment #1, I started making money in the market when I stopped listening to everyone except Uncle Ben Bernanke heheh.

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#7) On December 30, 2013 at 9:15 PM, leaderoftheback (85.38) wrote:

Yeah, I think you are correct.  Don't know if you read my more recent post about Crestmont predicting the S&P at 1836 if Buffett is right about profits reverting to the mean.  Obviously, Fed or no Fed a better outcome could be predicted.  Buffett apparently bet on his prediction, as did Hussman.  Their starting point was the same, their ends very different.  If I understand the math correctly, Hussman can never regain his lost ground.  If you bought and held his fund all this time, you are SOL.

And to Mr awallerjr, I very much aprreciate your comments, but I'm reminded of a common phrase; "we're all geniuses in an up market." (Hussman excepted).   I too have done well the past 2 years, but I made one hideous mistake in 2009; I moved a large chunk of dough into an Abolute Return Fund (fear factor).  It returned absolutely nothing, though it did consistently pay fees to Wall Street.  Fortunately I was able to see my error and moved into more conventional funds in the nick of time.  Blended together, we've managed to achieve that low single digit growth predicted by Hussman in 2007 (blended with a  17% annualized return in our Roth IRAs since 2007).   I like listening to perma bears and perma bulls.  Both camps hold certain truths, but the heck of it is that "truths" does not equal "success."  Results invariably lie somewhere in between.

Thank you both for your comments.  

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