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Publishes an interesting newsletter.
One feature is an "Outside the Box" recounting of
interesting articles he
has recently viewed. The following is a bit from
that letter and the example
I have "lifted" certainly gives cause to be
cautious.
He said this week:
This week's letter is from John P. Hussman, Ph.D.,
President of Hussman Investment Trust. His firm is one of the few that has
employed hedging techniques, similar to the hedge fund world, in a mutual fund
structure. John is also one of the really, really, really smart guys in the
running money business. John manages the Hussman Strategic Total Return Fund -
HSTRX and the Hussman Strategic Growth Fund - HSGFX.
What is striking is the extent to which stocks became
overvalued in 2000, and still appear overvalued at present. Specifically, for
stocks to be priced for a 4.25% real return, the required dividend yield works
out to be 2.75% (versus the actual value of just 1.80%). That implies a fair
value of about 770 on the S&P 500 index, suggesting that stocks would have
to decline by at least 35% in order to be appropriately priced. Unfortunately,
the model can be tweaked to produce a fair value of 1200 for the S&P 500
only by assuming that stocks were profoundly undervalued at every point in
history prior to 1998, including major peaks like 1929.
http://www.hussmanfunds.com/wmc/wmc050321.htm
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Clyde Lee
Chairman/CEO (Home of
SwingMachine)
SYTECH
Corporation email:
clydelee@xxxxxxxxxxxx
7910
Westglen, Suite 105
Office: (713) 783-9540
Houston, TX
77063
Fax: (713) 783-1092
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at:
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