Down goes the Dow

"So, what's the takeaway? Hussman's a very bright man. He provides compelling analysis and opinions, which I typically find quite interesting. The only problem is that the evidence, including his own track record, demonstrates that investors are best served by ignoring his opinions. The reason is that he isn't telling me (or you) anything that other sophisticated investors (such as pension plans, hedge funds, mutual funds) are unaware of. Thus, that information is already embedded in prices. The market has already priced the risks Hussman bases his analysis on. He just believes that he's smarter than the collective wisdom of the market. Or, at least, he wants you to believe he is, even if he knows better."

http://seekingalpha.com/article/2192193-should-people-listen-to-john-hussmans-forecasts?page=2

Yes, but Warren Buffett said this on non-GAAP in his most recent shareholder letter:

“Stock-based compensation is the most egregious example,” Buffett said. “The very name says it all: ‘compensation.’ If compensation isn’t an expense, what is it? And, if real and recurring expenses don’t belong in the calculation of earnings, where in the world do they belong?”

Bigfoot,

Believe what you wish.

Igy

Ghost of Igloi wrote:

Bigfoot,

Believe what you wish.

Igy

I really don't need your permission. You would do well to believe the facts about Hussman.

Big,

OK, but I didn't give you permission, I just said believe what you wish. I think you are blind to what is going on in the markets. Other than that I wish you well.

Igy

agip wrote:

predicting the stock market is a massive waste of time.

A complete bullshlt post, from a complete bullshlt poster. Maser has shown this a million times, and this hypocritical idiot agip who is convinced that he can predict the markets will rise over whatever term he invests in them keeps repeating that the markets can't be predicted.

Holy fvcking shxt some of you guys are stupid.

I'm not blind at all. I just prefer to deal with facts instead of relying on the investment advice of someone like Hussman who has a miserable track record.

Big,

You grasp a data point and assume it represents history. John Hussman has a long track record that goes well beyond what he freely admits was his "stumble." Some facts to add to the discussion:

"Is our profession really so lazy that we would advise people to risk their financial security based on tinker-toy models and pretty pictures that we don't even have the rigor to test historically? Investors appear eager to ‘scoop up’ so-called ‘bargains’ on the belief that stocks are ‘cheap relative to bonds.’ All of this is predicated on the belief that profit margins will remain at record highs, that the Fed Model is correct, and that P/E ratios based on extremely elevated measures of earnings should be evaluated based on norms for much more restrained measures of earnings. Based on daily closing prices, the S&P 500 has not even experienced a 10% correction, yet the recent decline has been characterized as if investors are acting ‘like the world is about to end.’ This is not the pinnacle of human irrationality, but in fact, quite a shallow selloff from a historical standpoint. The fact that Wall Street is branding it otherwise is evidence that investors have completely forgotten how deep the market's losses can periodically become.”

Hussman Weekly Market Comment, August 2007

Long-Term Evidence on the Fed Model and Forward Operating P/E Ratios

“Given the damage already wrought on the Nasdaq, there is a natural inclination to buy the dip. We believe that there is little merit in doing so. The current market climate is characterized by extremely unfavorable valuations, unfavorable trend uniformity, and hostile yield trends. This combination is what we define as a Crash Warning, and this climate has historically occurred in less than 4% of market history. That 4% of market history includes the 1929 crash and the 1987 crash, as well as a number of less memorable crashes and panics. We prefer to hedge until there is a rational prospect for market gains. When valuations are favorable, stocks are attractive from the standpoint of ‘investment’ – meaning that stock prices are attractive compared to the conservatively discounted value of cash flows which will be thrown off in the future. When trend uniformity is favorable, stocks are attractive from the standpoint of ‘speculation’ – meaning that regardless of valuation, investors are displaying an increased tolerance for risk which favors a further advance in prices.”

Hussman Investment Research & Insight, November 2000

Good Morning,

I find it interesting that John Hussman, or anyone that has a more measured view of the stock market, generates such emotional responses. Yet few here criticize or see the duplicity in the numbers and analysis coming from Wall Street. For this example I will use the more generous non-GAAP accounting. Last Twelve Months non-GAAP S&P 500 earnings per share for Q1 2016 is $98.61. Currently Wall Street estimates LTM per shares earnings for 2016 at $114.64. That number was projected at $118.12 on 3/31/2016, $125.56 on 12/31/2015, $129.37 on 9/30/2015, $132.36 on 6/30/2015 and $135.03 on 3/31/2015.

The current non-GAAP earnings for Q1 2016 is $23.97, so to reach the 2016 number of $114.64, the next three quarter earnings must average $30.22 to reach that number. Speaking of facts, the highest quarterly non-GAAP quarter ever was $29.60 for Q3 2014 (LTM non-GAAP EPS peaked that quarter at $114.51). Wall Street estimates for 2017 non-GAAP EPS is $134.47.

Keep in mind I am not even making comparison to S&P 500 index values or PE levels. So for those dreaming of an earnings recovery it appears to be more fantasy and hopium than tied to non-GAAP or GAAP EPS for that matter.

You want some facts, there are the facts.

Igy

current level of bullishness AAII survey is among lowest recorded - usually ths low during serious bear markets. By this measure, now is historically a good time to invest.

https://twitter.com/MebFaber/status/737754112893194240

Average S&P one year return for lowest 20 bull reads?: 19.9%

Bearish sentiment has averaged 30.6% over the life of the survey. It has a standard deviation of 10.1%, with typical readings ranging between 20.5% and 40.7%. Bearish sentiment is not considered to be extraordinary high until it surpasses 50.8%. It is not considered to be extraordinarily low until it falls below 10.5%. The record high for bearish sentiment is 70.3%, set on March 5, 2009. The record low is 6.0%, set on August 21, 1987.

[quote]Ghost of Igloi wrote:

Big,

You grasp a data point and assume it represents history. John Hussman has a long track record that goes well beyond what he freely admits was his "stumble."

Actually he presented you with multiple data points.

My God some of you guys are stupid.

Ghost of Igloi wrote:

Bearish sentiment has averaged 30.6% over the life of the survey. It has a standard deviation of 10.1%, with typical readings ranging between 20.5% and 40.7%. Bearish sentiment is not considered to be extraordinary high until it surpasses 50.8%. It is not considered to be extraordinarily low until it falls below 10.5%. The record high for bearish sentiment is 70.3%, set on March 5, 2009. The record low is 6.0%, set on August 21, 1987.

good point - the "neutral" group is abnormally large right now - who knows what that means

You are basing your "facts" on estimates (i.e. guesses).

and you have offered so much we can infer your brilliance.....

Fantasy,

Facts are: Wall Street estimates continue to come down and have little correlation to actual reported earnings.

Draw your own conclusions.

Igy

You stated my conclusion.

Fantasy,

My point being, if you are counting on a second half earnings recovery, the facts say "that is more fantasy than reality."

Igy