Hussman shows a risk of 50-66% [US stock]market losses

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steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

ducknald_don wrote:
Fri Oct 29, 2021 8:17 am
I don't know, looking at a country that had a massive stock market boom followed by an excess of debt looks quite appropriate at the moment. You only need one counter example to disprove a theory.
Investing like this is the definition of stupidity. It's managing for the worst possible case and you are going to pay a massive massive premium. Why not just invest in a broader index.

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

Dave wrote:
Fri Oct 29, 2021 2:20 pm
I was just pointing out there is quite a bit of nuance as to how much cash one can/should hold given various liquidity needs, age, psychological temperament, life goals, market valuations, etc. In other words, 100% long S&P 500 100% of the time is not the only way to go for all people at all times because Bogle and Buffett said "baskets of stonks always go up".
I agree with this. We should be rational and logical in deriving our investment portfolio.

The problem is you need a high stock percentage and indexes and significantly better than buying individual stocks in so many ways. They are self-cleansing which is freaken awesome. They diversify your portfolio. They are cheap.

A side point which is extremely important to me personally is that it's also lazy investing.

There should be nuance about the discussion but the problem with Hussman's prediction is that you can't predict the market and if you follow that advice you are rolling the dice against the odds.

There is bad general advice and good general advice. The idea that you are smart enough (or you can follow someone else smart enough) is really really poor investment advice and it's going to cost you in the long run.

The point being when you read something like this thread don't buy the kool aid. There isn't any guru out there. Pick an investment portfolio, make sure you have a large chunk of stock indexes and then relax because you're as good as you can be,

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

I'll add this to the discussion on nuance. It is definitely important but people can use the term nuance to introduce ideas that don't stand up against the data/facts.

Gurus area always going to have some reason why they know better. Never ever believe them.

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LetsRetireYoung
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by LetsRetireYoung »

Mister Imperceptible wrote:
Fri Oct 29, 2021 3:54 pm
you may be confusing yourself with someone who knows everyone
Not everyone, but I know more about finance than 95% of Americans. :) Name-dropping the great and powerful Hussman :lol: as if he's a household name like Buffett or Rockefeller... That's just silly, it really is. The guy appears to be just another perma-bear - and just like the cult leaders who make the mistake of saying when exactly the world will end, he'll end up carrying that ridiculous stain on his reputation for as long as the Internet is around.

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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by macg »

If you decide to go down the Wheaton level road, I'd love to see your thoughts on this conversation when you are 2-3 levels higher. I find it fascinating reading the "long-termers" and seeing the progression of thought, for those who went that route.

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

macg wrote:
Sat Oct 30, 2021 10:44 am
If you decide to go down the Wheaton level road, I'd love to see your thoughts on this conversation when you are 2-3 levels higher. I find it fascinating reading the "long-termers" and seeing the progression of thought, for those who went that route.
What possible difference could this make to the facts/data ?

It comes across to me as stating "if only you were as advanced as us you'd see the real truth". That is cult like and it has no place in rational logical discussions.

Investing is simple. Don't think that you are smart enough to predict the future consistently and don't think that anyone else is smart enough to predict the future consistently. This thread is proof but there are so many examples of this.

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

LetsRetireYoung wrote:
Sat Oct 30, 2021 9:33 am
Not everyone, but I know more about finance than 95% of Americans. :) Name-dropping the great and powerful Hussman :lol: as if he's a household name like Buffett or Rockefeller... That's just silly, it really is. The guy appears to be just another perma-bear - and just like the cult leaders who make the mistake of saying when exactly the world will end, he'll end up carrying that ridiculous stain on his reputation for as long as the Internet is around.
You are basically correct. I don't want to pick on Jacob or anyone who falls for this stuff because it's human nature. So many people fall for the idea that they have their special secret sauce. They lose consistently whereas the simple path to wealth (ala Jim Collins) works consistently.

If you want to be efficient in your approach to retirement or wealth generation that be rational and logical. Bet with the odds in your favor.

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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by LetsRetireYoung »

steveo73 wrote:
Sat Oct 30, 2021 4:22 pm
You are basically correct. I don't want to pick on Jacob or anyone who falls for this stuff because it's human nature. So many people fall for the idea that they have their special secret sauce. They lose consistently whereas the simple path to wealth (ala Jim Collins) works consistently.

If you want to be efficient in your approach to retirement or wealth generation that be rational and logical. Bet with the odds in your favor.
Another consensus accomplished. Kudos! :)

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Bankai
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by Bankai »

Interesting discussion. Here's the comparison of Hussman's flagship fund vs. Nasdaq index starting at the 2008 peak - if you took a pessimistic view and invested with this perma-bear, you'd be almost an order of magnitude poorer than you could've been if taking an optimistic view and investing in future (i.e. technology) index tracker, even when starting at the worst possible time for optimists:

Image

macg
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by macg »

steveo73 wrote:
Sat Oct 30, 2021 3:56 pm
What possible difference could this make to the facts/data ?

It comes across to me as stating "if only you were as advanced as us you'd see the real truth". That is cult like and it has no place in rational logical discussions.
Lol "cult-luke", interesting. I made no statements disputing any so called facts. It's a matter of perspective. People who are admittedly or seem to be at what would be labeled "lower Wheaton levels" are far more (concerned / obsessed / passionate /whatever word you want to use) about certain things - for example, what I was primarily thinking about was the discussion of how much in cash and not. People who are admittedly or seem to be at what would be labeled "higher Wheaton levels" are less (concerned /passionate / whatever word you want to use).

I am in no way sold (or in a cult, hahaha) on Wheaton levels, frankly I barely understand them, or at least in how they pertain to me. I was simply commenting that the perspective / view of people who are at lower Wheaton levels is far different than at higher levels. And to me, that's fascinating. Especially, as you can see here in this forum, as you see people grow and change.

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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by Scott 2 »

@LetsRetireYoung - What did you think of the MadFientist interview Jacob linked to?

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

macg wrote:
Sat Oct 30, 2021 6:09 pm
Lol "cult-luke", interesting. I made no statements disputing any so called facts. It's a matter of perspective. People who are admittedly or seem to be at what would be labeled "lower Wheaton levels" are far more (concerned / obsessed / passionate /whatever word you want to use) about certain things - for example, what I was primarily thinking about was the discussion of how much in cash and not. People who are admittedly or seem to be at what would be labeled "higher Wheaton levels" are less (concerned /passionate / whatever word you want to use).

I am in no way sold (or in a cult, hahaha) on Wheaton levels, frankly I barely understand them, or at least in how they pertain to me. I was simply commenting that the perspective / view of people who are at lower Wheaton levels is far different than at higher levels. And to me, that's fascinating. Especially, as you can see here in this forum, as you see people grow and change.
I'm cool with digging into this in some more detail.

If you look at the post that @bankai just made the facts/data are pretty clear cut. To me it's obvious but it was obvious before reading this thread because rational investing is in my opinion pretty clear cut.

When you start talking about Wheaton levels in this context in my opinion it just obfuscates a very very clear cut and simple discussion. It's adding complexity that isn't required and I think doesn't add any rational or logical point to the discussion other than the higher you get up our cult hierarchy the more you may see. It's nonsense.

Compare anyone who bought into that Hussman nonsense to JL Collins. JL Collins understands how to invest and isn't so easily swayed. He has facts and data and a rational approach.

https://jlcollinsnh.com/2012/03/09/you- ... be-conned/
https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

Look at the difference between someone who understands how to invest and someone who doesn't.

I should add I have no idea how Jacob or JL Collins invest today. I don't trust either of them. I don't care about gurus.

I'll talk about perspectives or opinions. Anyone can have a perspective or an opinion. It's cool. The point is can you justify your opinion/perspective rationally and logically. When it comes to investing this thread shows how guru thinking is really dumb. If you were talking about asset allocations and stated well I'm personally risk averse and I therefore have a 50% bonds/cash allocation that to me would make sense. I wouldn't agree with it personally but you haven't tried to dispute the facts. You've added your own spin to the issue but you understand the issue.

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

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Scott 2 wrote:
Sat Oct 30, 2021 7:31 pm
@LetsRetireYoung - What did you think of the MadFientist interview Jacob linked to?
I listened to it. It was good.

One thought came to my mind when listening to that podcast. People invest for different reasons. My focus for instance is on getting the best possible risk adjusted return and I sort through the facts/data to figure that out.

I get the impression Jacob is trying to win the game or something like that. He is trying to figure it out. I don't think he is after the best possible risk adjusted return.

I could be wrong in my impression because I am psychoanalysing someone else.

I'll relate a story to try and make this point. My FIL is really wealthy. He was a hedge fund manager. He was retired via the hedge fund going broke at 40. This sounds bad but he is the wealthiest person I know and will probably ever meet. He doesn't invest in index funds. It's not because they don't work. I've heard him state it works. He isn't going to beat the market consistently. He doesn't invest in index funds because investing to him is more about playing the game and figuring things out. So he will take massive punts on the movement of the dollar. He will invest in various properties because his wife decides to buy a property. He works to this day and will work until he dies. It's a different approach,

One thing I should be clear on is that these different approaches will consistently under perform compared to simply applying modern portfolio theory to the development of your portfolio. You can't consistently out smart the markets. Developing an investment portfolio is not rocket science and good investing principles are actually really easy. I don't want to make out that being different works better. It's sub optimal.

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Mister Imperceptible
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by Mister Imperceptible »

LetsRetireYoung wrote:
Thu Oct 28, 2021 6:58 pm
Historically, typically, on average, stocks go from bottom left to top right ;)
See my digits? Out of sight
Retired early to my delight
A product of central banker’s might
Always up, and to the right

Nine carrier groups keep all afright
Accept our paper, or we just might
Let it fall, set all alight
Til then- Up, and to the right
Last edited by Mister Imperceptible on Sat Oct 30, 2021 11:35 pm, edited 1 time in total.

macg
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by macg »

steveo73 wrote:
Sat Oct 30, 2021 7:48 pm
Apparently I haven't been very clear with my statements, and for that I apologize. Hopefully this clears it up.

I don't particularly have an opinion on this topic. I know next to nothing about investing, haven't gotten to that topic yet in my goals. Which I guess gives me the benefit of also not believing that my way is the only way, and lets me just take it all in to percolate in my brain for when I do get into it.

My only comment here was purely that the conversation is fascinating because it's between different sides - some who are super passionate / involved / convinced their opinion is the right way, and some who are less passionate / already past the point of being heavily involved in this subject.

In this forum, those types of differences in mindsets are usually referred to as people being at different "Wheaton levels".

Hence, my comment that it would be super interesting to see the differences in how the individuals talk a few years from now (and presumably a different mindset, or "Wheaton level") about the same subject.

There is no intention of me arguing facts / stats / opinions, that's why I never mentioned them. Purely an observational statement about how perspectives, how levels of passion, how levels of involvement, all change.

And I'll bow out of this conversation now, since I don't want to derail anything. I purely interjected to express the coolness and fascination I have with the differences in thinking.

steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

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macg wrote:
Sat Oct 30, 2021 11:28 pm
Hopefully this clears it up.
Thank You. That makes a tonne of sense.

When I listened to Jacob talking in that podcast I sort of understood more of where he was coming from. Two people can view the same issue from completely different perspectives. It's not right or wrong unless you can define what your goal is.

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Re: Hussman shows a risk of 50-66% [US stock]market losses

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Mister Imperceptible wrote:
Sat Oct 30, 2021 11:22 pm
Hahaha, I really enjoyed this comment. :) It's so geopolitically aware, even if I don't ascribe as much to the CB as you, I still think it's under-ratedly insightful.
Bankai wrote:
Sat Oct 30, 2021 5:50 pm
Interesting discussion. Here's the comparison of Hussman's flagship fund vs. Nasdaq index starting at the 2008 peak...
I have been studying Bruce Greenwald lately and I think his comment on Jeremy Grantham's permabear views (which are much like Hussman) are at least one flaw in Hussman's assumptions. He points at the profits being ~14% of national income vs historical norms of 9%, thus a 1/3rd inflated. He suggests it has to do with the switch to a service economy. The question is, are these better companies or is it an "era" that will revert eventually? Of course even if you believe in mean reversion in the long run, it doesn't mean you won't have missed out on a boat load of money which might be enough money you'd no longer care about mean reversion. Thus your chart. But those are past earnings. To channel my inner Mister Imperceptible, "I know what you're thinking, did the fed fire 6 shots or only 5? Well to tell you the truth. in all this excitement the fed's lost track too. ... You gotta ask yourself one question, "Do I feel lucky?" Well do ya punk?" Is this the economy where mean reversion finally happens or do you feel lucky?

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Bankai
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by Bankai »

Japan is not the only example of a single country stock market doing extremely poorly over 2+ decades - consider the less known disasters in developed markets of Southern Europe. Greece is an especially sobering case with a nominal return of -84.5% since 1999 and the real return likely over -90%. Will Greece ever mean revert? Considering it would require its stock market to go up by an order of magnitude, I'd not hold my breath it will happen in my lifetime.

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But is this a reason to turn into a dooster-perma-bear? Or rather a reason to diversify internationally? Looking at annualized returns for various countries over the last 120 years (from Credit Suisse investment returns yearbook - a highly recommended read for anyone investing in markets), it's clear that the median country underperformed a world tracker. There were some who did marginally better but only a few who did much better (+1% per annum), most notably the US. Now, there might be very good reasons for the US stock market's outperformance, but for investors born there was it not mainly luck that they invested in their own country? After all, almost no one went out of their way to invest heavily in other big winners of the last century - New Zealand, Australia, or South Africa. And the returns for the next 50 years might look very different - can 20% of the world economy continue to constitute 60% of the world stock market capitalization forever? I have the vast majority of my stash in global funds (mixture of passive and active) and only a couple of small positions in single-country funds where there are well-known inefficiencies to be exploited.

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steveo73
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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by steveo73 »

Bankai wrote:
Sun Oct 31, 2021 5:25 am
Looking at annualized returns for various countries over the last 120 years (from Credit Suisse investment returns yearbook - a highly recommended read for anyone investing in markets), it's clear that the median country underperformed a world tracker.
https://www.youtube.com/watch?v=_chiIIx ... XCYfBcMJFK

I like the ideas in this set of videos when it comes to how to structure a portfolio.

1. A world stock tracker. This basically ensures that your portfolio has longevity.
2. A bond fund domiciled in your local currency. You could use cash. This should be low risk investing.

I don't do this perfectly but if I was green field investing that would be my approach especially with limited funds. If I had a lot of money then I'd consider greater diversification in instruments like bitcoin, commodities, etc. The reason I would only purchase those instruments with additional money is that I believe in general those instruments will under perform a simple world stock tracker. I also would only consider those instruments. The smart bet would be just to chuck any extra money into the world stock tracker.

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Re: Hussman shows a risk of 50-66% [US stock]market losses

Post by ducknald_don »

Bankai wrote:
Sun Oct 31, 2021 5:25 am
Japan is not the only example of a single country stock market doing extremely poorly over 2+ decades - consider the less known disasters in developed markets of Southern Europe.
Or the FTSE-100 which has barely kept up with inflation over the last twenty years.

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