patrick.net

"John Hussman is highly respected for his prodigious use of data and adherence to what it tells him about the state of the financial markets. His regular weekly market commentary is widely regarded as one of the best-researched, best-articulated publications available to money managers.
Read more at http://investmentwatchblog.com/john-hussman-the-stock-market-is-overvalued-by-100-expect-prices-to-drop-by-50-or-more/#hBumfI21Vp1f9qSk.99"

LOL. Respected by whom?

Bubbabear says

John Hussman (born October 15, 1962)

Anyone who thinks the stock market is overvalued by 100% is a nut.
Even Peter Schitt and Marc Fibber aren't that stupid.

Bubbabear says

A stock, in fact any security, is a claim on any long-term stream of cash flows that investors can expect to be delivered to them over a very long period of time.

Really? What type of claim does one have exactly? If a stock is not issuing dividends, it is just a next greater fool investment.

Blurtman says

Really? What type of claim does one have exactly? If a stock is not issuing dividends, it is just a next greater fool investment.

Not really--you own a part of the company. Even if it doesn't issue dividends, you own the cash reserves, assets, etc.

The stock market is a Keynesian Beauty Contest with many degrees of anticipation. It is a game of people, not company or finance.

tatupu70 says

Blurtman says

Really? What type of claim does one have exactly? If a stock is not issuing dividends, it is just a next greater fool investment.

Not really--you own a part of the company. Even if it doesn't issue dividends, you own the cash reserves, assets, etc.

A speculative claim.

Blurtman says

A speculative claim.

I don't follow you. You own a percentage of the company--all the assets. The value of those assets may rise and fall, but your ownership is real...

"Truths" and "real" things are some of the least useful things in life.

tatupu70 says

Blurtman says

A speculative claim.

I don't follow you. You own a percentage of the company--all the assets. The value of those assets may rise and fall, but your ownership is real...

If true, than it would be quite easy to determine stock prices, but I assure you that prices are much higher than what is left for common shareholders to claim.

What makes you think the stock market has some unobservable intrinsic value?

To me, value is as metaphysical as that pot of gold on the other side of the rainbow.

sbh says

Strategist says

Anyone who thinks the stock market is overvalued by 100% is a nut.


Even Peter Schitt and Marc Fibber aren't that stupid.

Hussman is anything but stupid. The market is due for a correction, and Hussman's grasp of market history bears this out.

He said it's 100% overvalued. He's pretty much calling for the end of the world.

sbh says

Furthermore, the man has a good command of English, which is rare in the investment world.

Forecasting stocks is not an English competition. It might explain why Marc Fibber is so screwed up in his stock predictions. Every time he comes on TV, it's as if he is howling in pain.

sbh says

He has very good reasons for being wrong, so far.

He is a fool is at the top of the reasons.

Strategist says

He said it's 100% overvalued. He's pretty much calling for the end of the world.

If something is 100% overvalued, nothing may prevent it from becoming 200% overvalued.

Peter P says

Strategist says

He said it's 100% overvalued. He's pretty much calling for the end of the world.

If something is 100% overvalued, nothing may prevent it from becoming 200% overvalued.

Thank God.

I just don't get "value" investment. The stock market is all about crowd psychology. The market can stay irrational for a very long time.

Peter P says

I just don't get "value" investment. The stock market is all about crowd psychology. The market can stay irrational for a very long time.

The Nasdaq bubble proved that in 2000, and the stock market again proved that in 2008, both due to irrational greed and fear.

Strategist says

The Nasdaq bubble proved that in 2000, and the stock market again proved that in 2008, both due to irrational greed and fear.

Greed is simply the fear of missing out.

And I still don't understand why academic charlatans tend to believe in the efficient market crap.

Blurtman says

If true, than it would be quite easy to determine stock prices, but I assure you that prices are much higher than what is left for common shareholders to claim.

Of course--the prices reflect the present value of the future cash flow of the company. As the future is unknown, the correct price is also an estimate and differs from person to person.

Peter P says

And I still don't understand why academic charlatans tend to believe in the efficient market crap.

If markets are driven by emotions, it's not possible to have efficient markets.
I think in the long run, markets are efficient.

tatupu70 says

Blurtman says

If true, than it would be quite easy to determine stock prices, but I assure you that prices are much higher than what is left for common shareholders to claim.

Of course--the prices reflect the present value of the future cash flow of the company. As the future is unknown, the correct price is also an estimate and differs from person to person.

Forecasting stock prices is more art than science. If it was science, everyone would arrive at the same conclusions.

tatupu70 says

Blurtman says

If true, than it would be quite easy to determine stock prices, but I assure you that prices are much higher than what is left for common shareholders to claim.

Of course--the prices reflect the present value of the future cash flow of the company. As the future is unknown, the correct price is also an estimate and differs from person to person.

Oh, stock price speculation takes into account much more than expected future revenues. That is textbook nonsense.

Blurtman says

tatupu70 says

Blurtman says

If true, than it would be quite easy to determine stock prices, but I assure you that prices are much higher than what is left for common shareholders to claim.

Of course--the prices reflect the present value of the future cash flow of the company. As the future is unknown, the correct price is also an estimate and differs from person to person.

Oh, stock price speculation takes into account much more than expected future revenues. That is textbook nonsense.

It's theoretical. Another one says the only value in stocks is the dividends it pays over time. Even earnings don't matter as much.

Strategist says

Forecasting stock prices is more art than science. If it was science, everyone would arrive at the same conclusions.

No, because like I said, you have to estimate future cash flows which is very speculative. Different people can have very different ideas of the future.

Blurtman says

Oh, stock price speculation takes into account much more than expected future revenues. That is textbook nonsense.

Sure, speculation does--that's nothing more than gambling. That's not what we're talking about though.

Buying a stock shouldn't be speculation.

tatupu70 says

Blurtman says

Oh, stock price speculation takes into account much more than expected future revenues. That is textbook nonsense.

Sure, speculation does--that's nothing more than gambling. That's not what we're talking about though.

Buying a stock shouldn't be speculation.

Any decision is a speculation.

Strategist says

It's theoretical. Another one says the only value in stocks is the dividends it pays over time. Even earnings don't matter as much.

It's not theoretical and it's certainly not textbook nonsense. Whether or not people do the calculations before buying a stock is up to them, but it doesn't make it less true.

Peter P says

Any decision is a speculation.

Speculation has a specific definition in economic terms and every decision does not meet that definition.

http://economictimes.indiatimes.com/definition/speculation

tatupu70 says

Speculation has a specific definition in economic terms and every decision does not meet that definition.

Too bad economics is far from definitive. False knowledge at best.

tatupu70 says

Blurtman says

Oh, stock price speculation takes into account much more than expected future revenues. That is textbook nonsense.

Sure, speculation does--that's nothing more than gambling. That's not what we're talking about though.

Buying a stock shouldn't be speculation.

Valuation theory is pretty much bogus. Price is what will be paid, for whatever reason, including illogical beliefs, too much cash in circulation, a perception of momentum, what is currently in vogue, what fits the meme of the month, etc.

Besides, price affects the fundamental as much as the other way around.

Anyway, increasingly so, investment is no longer about economics and finance. Rather, it is a domain of game theory and machine learning.

sbh says

There will ALWAYS be under valued securities.

But that is not actionable information.

Stock valuation models are even less useful than common options pricing models.

sbh says

Strategist says

He said it's 100% overvalued.

You don't deserve this advise, but you should be careful about saying stupid things. And you should think beyond headlines. You've spent too much time swapping spit with CIC so I shouldn't be surprised that you don't think critically. Hussman isn't saying that stocks are over valued in absolute terms by 100%. Go back and read it again. He says that stocks are twice the value of a business cycle low reversion point that would bring them back to a "normal rate of return" for investors. Do you actually grasp the difference between that and the ignorant turd you just pinched off?

OK, I'll go with that explanation.
i would still put Hussman, Schitt and Fibber in the same camp of soon to be BK. Warren Buffett is the man to take advise from.

sbh says

There will ALWAYS be under valued securities. Denying that is utter stupidity. That's the operative condition. What do you do? Labor isn't worth fuck all in America, so what are you going to do with money? Do something or shut the fuck up.

How about figuring out the undervalued securities and buying them?
Stocks of homebuilders are way underpriced. I'm all in.

Strategist says

i would still put Hussman, Schitt and Fibber in the same camp of soon to be BK. Warren Buffett is the man to take advise from.

Well, of course, someone who is able to make billions with his philosophy deserves more respect.

However, you have to assume that every piece of advice comes with an agenda.

Strategist says

How about figuring out the undervalued securities and buying them?

How do you know when they will cease to be "undervalued?"

Blurtman says

Valuation theory is pretty much bogus. Price is what will be paid, for whatever reason, including illogical beliefs, too much cash in circulation, a perception of momentum, what is currently in vogue, what fits the meme of the month, etc.

Of course it is. Price is whatever someone will pay for it.

Again--that doesn't make valuation theory bogus.

Peter P says

Stock valuation models are even less useful than common options pricing models.

Only because they depend on information that is difficult to predict...

tatupu70 says

Only because they depend on information that is difficult to predict...

Then what is the value of models? I reckon they were concocted to support the modernist meta-narrative.

From another perspective, ALL models are 100% correct if the inputs are allowed to be 100% uncertain. How useful is that?

Models are overrated. Once the makeup wears off they are merely skeletons.