Down goes the Dow

Earnie wrote:

Earnings Scorecard: For Q2 2018 (with 99% of the companies in the S&P 500 reporting actual results for the quarter), 80% of S&P 500 companies have reported a positive EPS surprise and 72% have reported a positive sales surprise.

Could you put that into something i can understand? The recent one about being on a ship with a drunk captain particularly comes to mind.

Got to love ending the week on an up-note, don't you?!

Again.

Ghost of Igloi wrote:

Earnie wrote:

Earnings Scorecard: For Q2 2018 (with 99% of the companies in the S&P 500 reporting actual results for the quarter), 80% of S&P 500 companies have reported a positive EPS surprise and 72% have reported a positive sales surprise.

https://mobile.twitter.com/hussmanjp/status/1035539377588502528

"he creates after-the-fact models and excessively tweaks the various parameters. He then adds a layer of dense prose that prevents anyone from explaining what he has done. None of it is peer-reviewed. It is simple data mining, creating a "syndrome" from known results – impossible to disprove."

Jeff Miller dashofinsight.com

"I argued that the chart was a “curve-fit”–an exploitation of coincidental patterning in the historical data set that was unlikely to repeat going forward. My skepticism was grounded in the fact that the chart purported to correlate valuation with nominal returns, unadjusted for inflation. "

"Unfortunately, John’s model for estimating prospective future returns is not “historically reliable.” It contains significant realized historical errors in its assumptions, specifically the assumptions that nominal growth will be 6.3%, and that valuations will mean-revert over 10 year time horizons. The model is able to produce a strong historical fit on 10 year time horizons inside the 1935 to 2004 period only because it capitalizes on superficialities that exist on that horizon and in that specific period of history, superficialities that cause the model’s growth and valuation errors to offset. There is no logical reason to expect the superficialities to be endemic to market function–repeatable, reliable–and they do not hold up in out of sample testing–testing in different periods and over different time horizons, including time horizons that correspond to odd multiples of half market cycles, such as 30 years. There is no basis, then, for expecting them to persist going forward."

Fund A:

Objective: The Fund seeks to achieve long-term capital appreciation, with added emphasis on the protection of capital during unfavorable market conditions. It pursues this objective by investing primarily in common stocks, and uses hedging strategies to vary the exposure of the Fund to general market fluctuations (page 1).

Investment strategy: The investment manager expects to intentionally “leverage” or increase the stock market exposure of the Fund in environments where the expected returns from market risk is believed to be high, and may reduce or “hedge” the exposure of the Fund to market fluctuations in environments where the expected return from market risk is believed to be unfavorable (page 3).

To make it abundantly clear how this fund defines leverage and hedging, the prospectus states.

Leverage: "The maximum exposure of the Fund to stocks, either directly through purchases of stock or indirectly through option positions is not expected to exceed 150% of its net assets" (page 3).

Hedging: "The total notional value of the Fund’s hedge positions is not expected to exceed the value of stocks owned by the Fund, so that the most defensive position expected by the Fund will be a “fully hedged” position in which the notional values of long and short exposures are of equal size" (page 3).

Fund A, which states it can have market exposure between 0% to 150%, was materially short the market

Fund A is HSGFX ; Hussman Strategic Growth Fund

seattle prattle wrote:

Could you put that into something i can understand? The recent one about being on a ship with a drunk captain particularly comes to mind.

Got to love ending the week on an up-note, don't you?!

Again.

Seattle,

Actually I do, the longer the market is divorced from fundamentals the greater the mean reversion. So I cheer the insanity!

Igy

But wait. I thought you were never out of the market. That would mean that you were in the market.

Which is it?

Are you for the bubble or the pin?

One or the other, a bubble or a pin. Which is it going to be?

Seattle,

Positioned for the pin presently. Now really, look at the chart of your fav stocks I posted. If you think any of that is normal, well OK. Not much else I can say.

Igy

Ghost of Igloi wrote:

Seattle,

Positioned for the pin presently. Now really, look at the chart of your fav stocks I posted. If you think any of that is normal, well OK. Not much else I can say.

Igy

Well, that is the whole point. I picked them because they were not normal.

Do you think i bought Amazon years ago because i like music and CDs? No, i bought it because it was a disrupter. Same goes for Google, Apple, Netflix.

When i got ETFs that were triple leveraged, i had hoped they would have trajectories like they did, and the fact that they were so grossly leveraged just made the pay-off sweeter.

So, yeah.

I think that is the point, to choose companies which have particularly good business strategy and do so at a fair price.

Ghost of Igloi wrote:

seattle prattle wrote:

Could you put that into something i can understand? The recent one about being on a ship with a drunk captain particularly comes to mind.

Got to love ending the week on an up-note, don't you?!

Again.

Seattle,

Actually I do, the longer the market is divorced from fundamentals the greater the mean reversion. So I cheer the insanity!

Igy

Uh, mean reversion is very specific. It can’t be greater, or lesser, than the mean.

seattle prattle wrote:

Ghost of Igloi wrote:

Seattle,

Positioned for the pin presently. Now really, look at the chart of your fav stocks I posted. If you think any of that is normal, well OK. Not much else I can say.

Igy

Well, that is the whole point. I picked them because they were not normal.

Do you think i bought Amazon years ago because i like music and CDs? No, i bought it because it was a disrupter. Same goes for Google, Apple, Netflix.

When i got ETFs that were triple leveraged, i had hoped they would have trajectories like they did, and the fact that they were so grossly leveraged just made the pay-off sweeter.

So, yeah.

I think that is the point, to choose companies which have particularly good business strategy and do so at a fair price.

Seattle,

OK, of course I think that is delusional, but you win for now. Good luck though and best wishes.

Igy

Thank you, Igy. And best to you as well, and enjoy the lovely weekend.

You know, thinking back on the path thus far, it was when all those articles were giving advice like re-balance and diversify and emulate age based ratios of equity to fixed asset to savings, etc... that was when, on the contrary, i bought more. And continued to do so, fairly often.

I didn't really realize how out of whack it all was until we started talking about the whole leveraging thing and i saw how years of appreciation had gotten it so out of balance.

Seattle,

I think one has to get to the source of why fundamentals haven’t mattered and the answer in my view is central bank policies. So the question investors should ask how does it end? Of course no one knows, but in the most areas of physics, biology, politics, pretty much you name it, imbalances and distortions are corrected. The shocks to restore balance result in chaos. There is no warning, we got a taste of that in February. Perhaps it is repeating today in emerging markets, who knows? But just like this market is historic in the rise so will likely be the conclusion. Truly a very interesting time to be involved in the markets.

Igy

muy loca,

Hussman has admitted to his errors and has addressed his critics. I am not about to act as his defender. I enjoy his writings and personally find his views a balance to the less than sanguine fare in the financial media.

Igy

Ghost of Igloi wrote:

muy loca,

Hussman has admitted to his errors and has addressed his critics. I am not about to act as his defender. I enjoy his writings and personally find his views a balance to the less than sanguine fare in the financial media.

Igy

Hussman’s errors are legendary and unending. His writings feature pseudo-mathematics and mumbo jumbo designed to pull the wool over his reader’s eyes. Only weak thinkers fall for his nonsense.

OK, this may help explain the markets to you....

https://m.youtube.com/watch?v=vwbKYcBdVyk

Yutre wrote:

Hussman’s errors are legendary and unending. His writings feature pseudo-mathematics and mumbo jumbo designed to pull the wool over his reader’s eyes. Only weak thinkers fall for his nonsense.

Ghost of Igloi wrote:

OK, this may help explain the markets to you....

https://m.youtube.com/watch?v=vwbKYcBdVyk

I’m not surprised that is a resource for you or any other Hussman lemming.

Lemmings are blindly pouring money into the market. That is the common view.