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The Heavy Weight Hussman

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July 13, 2010 – Comments (5)

I love reading John Hussman's stuff, but the first stuff of his that I read was not investment, but fitness over 10 years ago.  He is an awesome supporter of the Body for Life Program, which is an awesome program.

Now, imagine my surprise when I start looking at the market and I find he is awesome on what he writes about the market as well.

Anyway, I thought his Misallocating Resources piece was very well written and brings out a lot of good points. He has state quite well something I have brought up in the past about technical trading.  There are so many using it, it is functioning no longer of true market signals, but on traders. My thoughts when how technical trading works was first explained to me was that the more people who use it, the less reliable it becomes.  I love the way he writes about this in the opening of the link.

He also does some great explaining on how all P/E are not equal and comparison's of what is being touted as the P/E today is different then what was used in the past.

Anyway, Misallocating Resources is a good read.

5 Comments – Post Your Own

#1) On July 13, 2010 at 10:18 PM, TMFJake (77.05) wrote:

Agree.  It's a great letter from Hussman.  Thanks for posting. 

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#2) On July 14, 2010 at 1:26 AM, Momentum21 (93.61) wrote:

He makes a good argument.  I took the technical trading reference more as being supportive of a "lack of conviction" in the market right now rather then a knock on TA itself. 

I am definitely not smart enough to discredit TA but it does seem to be abused by countless pundits when atalking point is needed for a bull/bear case.

My only problem with this guy is he definitely seems to stubbornly talk his book when he is smart enough to realize the irrationality of the market. Looks to me like he should have trusted his NFLX call more over the years and not hoarded the cash... : ) 

 

 

  

 

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#3) On July 14, 2010 at 10:27 AM, dwot (67.31) wrote:

Momentum, TA is supposed to work in the sense that people are doing fundamental analysis on the stocks so you are reading that people have done their homework.  I just think there are tons using TA so they make moves that influence what the HW is saying, only they didn't do HW.

I don't think it is any different then science, at what point is your research affecting the research results and changing outcomes  It happens a lot.

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#4) On July 14, 2010 at 11:22 AM, Griffin416 (99.98) wrote:

http://www.tradersnarrative.com/pe-ratios-in-low-interest-rate-environments-4426.html

I disagree with Hussman's p/e arguement in the article. This article I just linked to above shows that by "only" using p/e's now, the market is cheap.

Separately, whether you believe TA analysis or not, there are more computers out there doing trading than humans. Therefore, TA analysis is real and must be watched.

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#5) On July 14, 2010 at 6:58 PM, dwot (67.31) wrote:

Griffin, sure TA needs to be watched, but to what degree is it skewing fundamentals?

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