Skip to comments.HUSSMAN: Investors Don't Realize How Quickly All Of Their Recent Profits Could Get Destroyed
Posted on 12/24/2012 6:47:16 AM PST by blam
HUSSMAN: Investors Don't Realize How Quickly All Of Their Recent Profits Could Get Destroyed
Dec. 24, 2012, 7:05 AM
In his latest weekly note, John Hussman is very bearish and he blasts the Fed for not correctly fixing the economy.
This is very standard for him.
One interesting observation regards the fragility of investor gains:
The stock market is only a few percent from its 6-month high at present, and even an overextended move to about 1490 would put the S&P 500 at its upper Bollinger band (two standard deviations above the 20-period moving average) on daily, weekly and monthly resolutions. Thats something that we saw back in early 2011 (see Extreme Conditions and Typical Outcomes), when the S&P 500 Index was only about 5% below where it is today, and again in September 2012 (see Low Water Mark) when the S&P 500 was above where it is today. Overextended moves like that, coupled with other features of an overvalued, overbought, overbullish syndrome, are typically associated with awful outcomes over the following 6-18 months, though not always immediately.
Aside from the early 2011 instance, which was followed by a nearly 20% plunge before Bernanke launched QE2, and the September 2012 instance, the outcome of which remains to be seen, other points where the S&P 500 has reached its upper Bollinger band on a monthly resolution
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the dive will result in such a panic, obama will step in.
the libs thrive on chaos.
I certainly do. By following conventional wisdom and a stroke of luck, I avoided big losses in my retirement funds.
I retired in Dec. '99 and promptly moved my retirement from highly speculative "tech" stocks into a few blue chips and other safer venues because of the standard of , the older and nearer retirement you are, the safer you need to be.
I don't remember exactly when "techs" crashed but it wasn't very long after I retired, my former co workers thought I was nuts for not continuing to ride the boom and I was beginning to think they might be right because the market continued its climb for some months after I retired.
I invested to the max in the late 80s and the 90s decade and those years enabled me to retire at age 54. I didn't get any joy out of it but I watched a few friends get financially destroyed, staying "pat" even as techs began to crash. I suppose they had watched those double digit returns for too many years to believe they would ever end. A couple of those fine folks are still working as they approach their 70s. That's fine, for someone who wants to continue working but I know for a fact that those two did not want to.
Like I said, part of my getting out in time was blind luck, not shrewd planning on my part, except for the common sense part. Booms don't last forever neither do even slightly bullish markets. If time is on your side you can gamble a bit but we have a market destroyer in the white house and it doesn't take a market genius to see that.