I have overheard a lot of Western Chicagoland folks excitedly talking lately about how well the stock market has done since the Fiscal Cliff was resolved. Not since February 2000 (not a typo) has more money raced into equity funds than it did this past January 2013. I remember a quote from Sir John Templeton, “Sell when everyone else is buying”. He also wrote, “Buy when everyone else is selling,” though that isn’t evident today. Both are emotionally difficult to do in real life.
A guy I like to pay attention to is John P. Hussman, Ph.D. John is a stock market analyst and manager of The Hussman Funds in Ellicott City, Maryland. John is knownfor his criticism of the US Treasury and the Federal Reserve and for predicting the 2008-2009 US Recession. He is also a former professor of economics and international finance at the University of Michigan.
I copy (with permission) highlights of some recent comments John makes. You can read the entire Hussman article by clicking the link at the bottom.
Cheers, and feel free to call- Ed Downey.
A Reluctant Bear’s Guide to the Universe – John Hussman
“Present market conditions now match six other instances in history: August 1929 (followed by the 85% market decline of the Great Depression), November 1972 (followed by a market plunge in excess of 50%), August 1987 (followed by a market crash in excess of 30%), March 2000 (followed by a market plunge in excess of 50%), May 2007 (followed by a market plunge in excess of 50%) and January 2011 (followed by a market decline limited to just under 20% as a result of central bank intervention). These conditions represent a syndrome of overvalued, over-bought, over-bullish, rising yield conditions that has emerged near the most significant market peaks – and preceded the most severe market declines – in history…”
To read John’s full article: http://www.hussmanfunds.com/wmc/wmc130204.htm