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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (44928)	11/7/2005 10:03:03 AM
From: ild	Read Replies (1) \| Respond to of 110194

Global: Asian Convergence Stephen Roach (New York) Asia / Pacific: Diverse Opinions Andy Xie (Hong Kong) morganstanley.com

To: ild who wrote (44928)	11/7/2005 11:16:24 AM
From: Rarebird	Respond to of 110194

>>This is what Hussman thinks<< This is what Hussman hopes: "Unfortunately, if we examine historical combinations of a) an overbought condition b) in an unfavorable Market Climate c) with upward interest rate and inflation pressures, we observe some excruciatingly bad outcomes. That's not a forecast, but my hope is that it will go some distance in reconciling the fact that I have not responded to the current rally by taking any material amount of exposure to market fluctuations." hussmanfunds.com As long as there are Perma Bears on earth, there unquestionably exists a peculiar perma bears' irritation and rancor against (Equity) Bullishness. Dr. John Hussman is merely its most eloquent and, if one has ears for this, most ravishing and delightful expression. Every animal-including the permabear-instinctively strives for an optimum of favorable conditions under which it can expend all its strength and achieve its maximal feeling of power. Dr. Hussman has provided these conditions (in bold) in his weekly commentary, while grudgingly acknowledging that some of these conditions are not currently in bearish territory yet. Every animal-including the PermaBear- abhors, just as instinctively and with a subtlety of discernment that is higher than all reason, every kind of intrusion or hindrance that obstructs or could obstruct this path to the optimum. Thus, even if market conditions turned favorable, Dr. Hussman would remain 65% hedged or short. Part of my point here is that in contrast to what most Permabears think, PermaBears share the same irrational hopes and fears as their Bullish counterparts. The PermaBear affirms his existence and only his existence. Let "the world come to an end", but let there be a Perma Bear Philosophy, let the Perma Bear live!

To: ild who wrote (44928)	11/7/2005 2:44:04 PM
From: Mr.Creosote	Read Replies (2) \| Respond to of 110194

>>following your logic the market will never go down. That's not correct. The market will go down at some point when all of the things Russ is talking about start to matter. It doesn't help anybody to always be in a bearish posture and never change his outlook. Of course real estate inventories are up, of course our net savings rate is close to zero, of course corporate profit growth rates are slowing, and of course our debt level is historically high. But most americans still have well paying jobs and as long as they do they can continue to service their debt AND pay for goods and services they need or want thereby keeping the economy going. My own time frame is 6 months out. Just like many americans I have some stocks, some bonds, some real estate, and some cash (sorry no gold). The question is what to do right now. It's a question of asset allocation. The bears say the risks are high and stock valuations are too rich for what's coming. OK, you sell your stocks and real estate and with the proceeds you buy ... what? T-bills? Gold? Or keep it in cash with Ben Bernanke at the helm? None of the alternatives look good at this time. The lack of investment alternatives is a problem facing us all. Most americans will not liquidate their portfolios to buy foreign assets they know nothing about. As long as people have jobs and can pay their bills, the extreme bearish posture is not warranted. So keeping an eye out for serious drop in employment or wages is very important going forward. Also important is to pay attention to market action for clues. Some day the market will dip and not rebound. That's the clue we need. Right now however not only are the dips bought aggressively but the transports are leading over the industrials and nasdaq100 is leading over sp500. This does not support the bearish argument at all. I am very bearish over the long term but this is a time when the "active players" who move markets are focused entirely on their monthly and quarterly returns. We have to respect market action because we don't want to lose our money by being invested too early in bearish positions. As for Hussman I too think he is very smart and I do read his weekly comments but he (or anyone else for that matter) doesn't have a clue where the market will be three months out. (The fact that he is not yet exposed to the long side doesn't mean he won't do it at higher levels.)