Money and Finance
- Hussman Weekly Market Comment: Short Horizon, Long Horizon
Over history, and including the past decade, properly normalized valuations have remained a powerful guidepost for full-cycle and long-term returns, particularly on the horizon of 7-10 years. On that front, the current price/revenue multiple of the S&P...
- Hussman Weekly Market Comment: Sitting Ducks
The present market context is this: from a valuation standpoint, virtually every reliable measure of market valuation we observe is now within the highest 1% of historical observations prior to the late-1990’s bubble. “Reliable” in this context...
- Hussman Weekly Market Comment: The Hook
We are in very familiar – if frustrating – terrain here. While valuations are not as extreme as they were in 2000, the level of investor confidence in “free money” is nearly identical, as is my conviction that this belief in free money will end...
- Hussman Weekly Market Comment: The Siren's Song Of The Unfinished Half-cycle
Given the extent and maturity of the recent advance, it’s very odd that analysts are now beginning to toss around the idea that stocks have entered a secular bull market. These notions are based not on the level of valuation, nor on the duration of...
- Hussman Weekly Market Comment: Anatomy Of A Bubble
Presently, the Shiller P/E stands at 24. Be careful how you interpret the data in the table for Shiller P/E's above 24, since these levels were almost never observed in data prior to the late-1990's market bubble. You can see the odd effect of...
Money and Finance
Hussman Weekly Market Comment: Did Monetary Policy Cause the Recovery?
As investors, we should be aware that the current Shiller P/E of 24.8 (S&P 500 divided by the 10-year average of inflation adjusted earnings) is now above every historical instance prior to the bubble period since the late-1990's, save for the final weeks approaching the 1929 peak. We should also be aware that overvaluation alone in the late-1990’s did not stop the market from reaching even higher levels as new-era speculation culminated in the 2000 bubble peak.
It’s fine, and quite accurate to say that valuations are not as frenzied as they were at the 2000 extreme (a comparison that fell from the lips of Robert Shiller himself last week), provided that one also recognizes that the hypervaluation in 2000 has been followed by a period that included two separate market losses in excess of 50%, and a nominal total return from 2000 until today averaging just 3.2% annually. Even that weak 13-year return has been achieved only thanks to distortions that have again driven present valuations to temporary and historically untenable extremes.
Put simply, the past 13 years have chronicled the journey of valuations - from hypervaluation to levels that still exceed every pre-bubble precedent other than a few weeks in 1929. If by 2023, stock valuations complete this journey not by moving to undervaluation, but simply by touching pre-bubble norms, we estimate that the S&P 500 will have achieved a nominal total return of only about 2.6% annually between now and then.
- Hussman Weekly Market Comment: Short Horizon, Long Horizon
Over history, and including the past decade, properly normalized valuations have remained a powerful guidepost for full-cycle and long-term returns, particularly on the horizon of 7-10 years. On that front, the current price/revenue multiple of the S&P...
- Hussman Weekly Market Comment: Sitting Ducks
The present market context is this: from a valuation standpoint, virtually every reliable measure of market valuation we observe is now within the highest 1% of historical observations prior to the late-1990’s bubble. “Reliable” in this context...
- Hussman Weekly Market Comment: The Hook
We are in very familiar – if frustrating – terrain here. While valuations are not as extreme as they were in 2000, the level of investor confidence in “free money” is nearly identical, as is my conviction that this belief in free money will end...
- Hussman Weekly Market Comment: The Siren's Song Of The Unfinished Half-cycle
Given the extent and maturity of the recent advance, it’s very odd that analysts are now beginning to toss around the idea that stocks have entered a secular bull market. These notions are based not on the level of valuation, nor on the duration of...
- Hussman Weekly Market Comment: Anatomy Of A Bubble
Presently, the Shiller P/E stands at 24. Be careful how you interpret the data in the table for Shiller P/E's above 24, since these levels were almost never observed in data prior to the late-1990's market bubble. You can see the odd effect of...