Hussman: 6 Indications This is a “Terrible Time to Accept a Significant Amount of Market Risk”

John Hussman’s much more bearish than I am at this juncture and I think he’s been excessively bearish for a while now, but that doesn’t mean he will necessarily continue to be wrong.  In today’s note he highlighted 6 indicators that are consistent with a risk off environment:

“Put simply, my view is that the present is a terrible time to accept a significant amount of market risk. I certainly can’t provide a weighty argument to support the view that the market will advance or decline over the next week or the next month. But there is strong precedent for extended market losses and bear markets following overvalued, overbought, overbullish, rising-yield syndromes – say, Shiller P/E above 18, S&P 500 at multi-year highs, 8% above its 200 day moving average, close to its upper Bollinger bands (2 standard deviations above 20-period averages) on weekly and monthly resolutions, Treasury yields above 20-26 weeks earlier, and low bearish sentiment relative to bullish sentiment, all of which were observed in late-1972, July-August 1987, in 2000, in 2007, and early this month.”

Source: Hussman Funds


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • James vS

    If ever there were a man who wished for a market correction…

  • stpepper

    Well, if he’s predicting a significant market decline every single letter he pens, he’s bound to be right sometime.

    I see he’s still using the overvalued, overbought, overbullish line I made fun last of year.

  • rharaz

    I think Hussman’s investment time-frame is typically 4-6 years (i.e. business cycle), or perhaps even longer as he sometimes shows charts of predicted and actual 10 year returns for the SP500 (see

  • Bob

    I think one need only look at the performance of
    the Hussman funds to appreciate this highly
    intelligent mans performance. Where is Jesse
    Livermore when you need a good man ??

  • synchro

    The Synchro Iron Law on Economic Forecasting is that one’s economic forecast will be proven right only when the forecaster’s adherents, whether they are the forecaster’s investors, newsletter subscribers, clients, or fans have completely given up on him and his forecasts. Such is the perversity and reality of market forecasts.

    At least Hussman is smart enough to leave a pretty wide forecasting window: 2-weeks to 18 months. And it appears to be a rolling window.

    Above is said tongue-in-cheek. I’m actually a big fan of Hussman’s writing. He educated me a lot on macroeconomics, trading, and just plain rigorous thinking. You don’t have to agree with him, but I think most people would lose a debate with him solely on the basis of merit and logic of arguments.

  • BENI

    the big banks will lead the way south

  • Raymond

    US property market is recovering. This is the strongest driving force of the US economy. Correction is possible but I do not believe in collapse. But, the long run trend is bullish, there is US$1.6 trillion in the fed reserve with banks. every year US$480 billion will be printed. Lastly, US$16 trillion (US national debt) is on the way for printing as money also. Money illusion shall come.