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

To: UncleBigs who wrote (72159)	10/16/2006 8:27:58 PM
From: austrieconomist	Read Replies (2) \| Respond to 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).

To: UncleBigs who wrote (72159)	10/17/2006 12:20:09 AM
From: John Vosilla	Respond to of 110194

The broader index doesn't look as overbought. This run off the July bottom looks no different from the July 04, April 05 and October 05 bottoms. So far divergence relative to the DOW. Will it play catch up or does it's relative weakness signal the general's such as those in Hussman's fund need to fall on very narrow leadership? In any case seems risk/reward is against betting the farm on the large caps at this point in time. See I do agree with you quite often<g> 139.142.147.19