Monday, January 13, 2014

Hussman: On the Edge of Steep Losses

I just love this guy! His Wile E. Coyote analogy is as insightful as it is hilarious!  He says we stand on the edge of an anvil-fueled cliff!

"In July 2011, just before the market lost nearly 20% (but also the last time it corrected materially), I observed “Like Wile E. Coyote holding an anvil just past the edge of a cliff, here we are, looking down below as if there is much question about what happens next.” In my view, the stock market is hovering in what has a good chance of being seen in hindsight as the complacent lull before a period of steep losses. Meanwhile, we would require a certain amount of deterioration in stock prices, credit spreads, and employment growth to amplify our economic concerns, but even here we can say that there is little evidence of economic acceleration. Broad economic activity continues to hover at levels that have historically delineated the border of expansions and recessions" John Hussman, PhD (January 13, 2014)