Investing strategies and secular bear markets

[Hoop]

Fascinating isn't it all hoop ....love your post

So a much lower market scenario still on the cards?

An Open Letter to the FOMC: Recognizing the Valuation Bubble In Equities

John Hussman's fund record has been under-performing due to his very bearish stance over the last couple of years......Is it that the market stays irrational just long enough for the perma-bears to become bullish? ..anyway ... It seems he won't be on Janet Yellen's Xmas card list this year

[Bobcat.]

An Open Letter to the FOMC: Recognizing the Valuation Bubble In Equities

John Hussman's fund record has been under-performing due to his very bearish stance over the last couple of years......Is it that the market stays irrational just long enough for the perma-bears to become bullish? ..anyway ... It seems he won't be on Janet Yellen's Xmas card list this year

Thank you for the post, Hoop. I found the Hussman Open Letter fascinating - in particular his assessment of November's Equity Bubble characteristics (which by now have become even more extreme):

1. margin debt at the highest level in history and beyond 2.2% of GDP (a level that was matched only briefly at the 2000 and 2007 market extremes);
2. a blistering pace of initial public offerings - back to volumes last seen at the 2000 peak and featuring “shooters” that double on the first day of issue;
3. confidence in the narrative that “this time is different” (in this case, the presumption of a fail-safe speculative backstop or “put option” from the Federal Reserve);
4. lopsided bullish sentiment as the number of bearish advisors has plunged to just 15% and bulls have crowded one side of the boat;
5. record issuance of covenant-lite debt in the leveraged loan market (which is now spreading to Europe); and
6. a well-defined syndrome of “overvalued, overbought, overbullish, rising-yield” conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing).

This does not bode well for Equity markets in 2014, although given recent reforms in China and turnarounds in Japan those two markets may fare better than most. Also, as money flows from Equities to Precious Metals the ASX may find good support in that sector. The NZX will be hit along with most other sharemarkets. It's not a matter of If but When...and your guess is as good as mine. Hussman is picking next month. He may not be far wrong. At the latest, I would say April.

Discl: 70% of my portfolio is now in precious metal stocks.