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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: UncleBigs who wrote (72159)	10/16/2006 8:27:58 PM
From: austrieconomist	Read Replies (2) of 110194

< I have a big problem with his decision to get long at this point and plan to get longer in the near future.> Hussman (10/16): On the intermediate term, however, we've observed enough improvement in market action to warrant – in the event of short-term weakness – a small exposure (perhaps 1-2% of assets) to index call options in order to “soften” our hedge, provided that market internals remain firm during such a short-term pullback. 1-2% of assets in call options seems to me to be quite far from "getting long". <This buy high, sell low trend chasing mentality is killing his returns.> HSGFX returns, rather, appear to have been limited due to the fund's hedging. If the general US markets are going up, HSGFX will not keep pace because it has for the most part the past number of months held puts equal to 100% of the long positions (fully hedged). There is no evidence that HSGFX has lost value at any time this year because of being long in a down market ("buying high" although clearly that can happen, if Hussman does in fact remove his hedges and gets long and misreads the market which proceeds to go down).

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