Investing strategies and secular bear markets

[kiora]

Thanks Hoop
The last 10 years.Wow,what a great time to be invested in the SM
Next 10 years agh???
Watching out for inflation
Investments spread over other asset classes a bit of a hedge I hope.(These other asset classes have seen pretty poor returns over last 10 years due in most part to low inflation but also investment behavior I would assume)

[bullfrog]

" Reality dictates the cycles and the trends record the changes."

Ah ha, got it.

Great explanation, actually understood it! Gives me a better understanding of a bigger picture that I was only dimly aware of. I've got a couple of new things to think about now, helps with the "why".

And as a bonus, I can "entertain" people at parties with my new found knowledge...secular, interesting word...did you know...

[Hoop]

Alice's Adventures in Equilibrium by John Hussman

Quote: ".....Presently, every one of these deciles is at the most extreme level in history (unlike the 2000 peak, when there was far more dispersion across valuations). This is breathtaking, and I don’t expect it to end well...."

A huge educational read...I have a lot of respect for John even though his fund investment under-performed for a while due to investing in "theory" rather than the crazy world of "practice"..As with other Fundamental Gurus there is a media perception that John is a "perma-bear"

John's fundamental orientation is the basis of his article and skimming through it is very scary....My god look at the size of the Equity Bubble...it is enormous and it's still inflating...

Personally it seems we have slowly moved away from the "real" world and have been happy & content to slide down the rabbit hole into Wonderland where our investment needs are satisfied in the most strangest of ways...

Times up for me to stop typing, and go to lunch ..What a great day, there's a table with a few inhabitants sitting around it..and there's the Mad Hatter....he brews a good cup of Tea.....nice.

[BlackPeter]

Alice's Adventures in Equilibrium by John Hussman

Quote: ".....Presently, every one of these deciles is at the most extreme level in history (unlike the 2000 peak, when there was far more dispersion across valuations). This is breathtaking, and I don’t expect it to end well...."

A huge educational read...I have a lot of respect for John even though his fund investment under-performed for a while due to investing in "theory" rather than the crazy world of "practice"..As with other Fundamental Gurus there is a media perception that John is a "perma-bear"

John's fundamental orientation is the basis of his article and skimming through it is very scary....My god look at the size of the Equity Bubble...it is enormous and it's still inflating...

Personally it seems we have slowly moved away from the "real" world and have been happy & content to slide down the rabbit hole into Wonderland where our investment needs are satisfied in the most strangest of ways...

Times up for me to stop typing, and go to lunch ..What a great day, there's a table with a few inhabitants sitting around it..and there's the Mad Hatter....he brews a good cup of Tea.....nice.

Interesting lecture - thanks for sharing.

Good to know, however that John has as well only some understanding (well, more than me) about a quite small part of a very complex system following chaos theory.

What he - I think - does not want to see is that human history is not driven by the reality (the small bit of the system I was talking about) he is describing, but by the "incoherent mental formations" he mentioned.

Large parts of human history have been driven by religions and religious conflicts and by ideas and stories about nationhood. Many security prices are driven by stories, and more often than not these stories have no link into reality. Markets don't assess securities according to their earnings potential, but according to their value in a story the individual buyer likes or believes.

A kilogram of gold does not earn me a cent of earnings over time (unless i sell it), and still it has long term a growing price. A Bitcoin does not even look good and has no earnings potential, and it still might have a higher value than the gold I can at least touch. Gold is as well a good example to show that this incoherent value does not necessarily disappear over time.

I think this is the problem of all analysts - we can argue about valuing securities until the cows come home, but what really matters is what another irrational individual is prepared to pay for it. Impossible to predict.

I understand that at Martin Luther's times rich roman catholic individuals paid huge sums of money to receive so called indulgence letters issued by the holy church, promising them forgiveness of their sins for paying money. Just another sort of security supposed to make sure they have a pleasant afterlife and sit close to the creator at the dining table. Would people be these days as stupid? Of course, they are - they are still happy to pay huge amounts of money for something which is - in a system of coherent thinking - absolutely worthless and senseless: Cryptocurrencies, unrealistic valued growth shares, anything where markets pay for a story not linked into reality - and yes, some are still paying money to lying preachers as well.

Johns problem is that he wants to bring everything back to the coherent rules ... and considers the reminder as anomality. It is not. Humans are not made for rationality and happy to value senseless lies. Nobody though found yet a method to predict the irrational valueing behaviour.

Value based on incoherent thinking is not following any coherent rules - which means that nobody is able to predict the future of markets or, to be more specific - the future price of securities. Oops, didn't Ben Graham tell us already that nobody can predict them ... I think this is true not just for an individual security, but as well for the sum of all securities (the market).

I think that John's view of what is going to happen is as good as anybody else's view, but still - a good reminder that the next crash might come (I am sure, it will) - and that it might be the big one (well, for our life times, anyway).

[BlackPeter]

Duplicate (created thanks to insufficient server performance) deleted

[Hoop]

Great post Black Peter...your first one not the second one . Yeah I nearly doubled up on my post too thinking it hadn't gone through..

[Entrep]

Interesting lecture - thanks for sharing.

Good to know, however that John has as well only some understanding (well, more than me) about a quite small part of a very complex system following chaos theory.

What he - I think - does not want to see is that human history is not driven by the reality (the small bit of the system I was talking about) he is describing, but by the "incoherent mental formations" he mentioned.

Large parts of human history have been driven by religions and religious conflicts and by ideas and stories about nationhood. Many security prices are driven by stories, and more often than not these stories have no link into reality. Markets don't assess securities according to their earnings potential, but according to their value in a story the individual buyer likes or believes.

A kilogram of gold does not earn me a cent of earnings over time (unless i sell it), and still it has long term a growing price. A Bitcoin does not even look good and has no earnings potential, and it still might have a higher value than the gold I can at least touch. Gold is as well a good example to show that this incoherent value does not necessarily disappear over time.

I think this is the problem of all analysts - we can argue about valuing securities until the cows come home, but what really matters is what another irrational individual is prepared to pay for it. Impossible to predict.

I understand that at Martin Luther's times rich roman catholic individuals paid huge sums of money to receive so called indulgence letters issued by the holy church, promising them forgiveness of their sins for paying money. Just another sort of security supposed to make sure they have a pleasant afterlife and sit close to the creator at the dining table. Would people be these days as stupid? Of course, they are - they are still happy to pay huge amounts of money for something which is - in a system of coherent thinking - absolutely worthless and senseless: Cryptocurrencies, unrealistic valued growth shares, anything where markets pay for a story not linked into reality - and yes, some are still paying money to lying preachers as well.

Johns problem is that he wants to bring everything back to the coherent rules ... and considers the reminder as anomality. It is not. Humans are not made for rationality and happy to value senseless lies. Nobody though found yet a method to predict the irrational valueing behaviour.

Value based on incoherent thinking is not following any coherent rules - which means that nobody is able to predict the future of markets or, to be more specific - the future price of securities. Oops, didn't Ben Graham tell us already that nobody can predict them ... I think this is true not just for an individual security, but as well for the sum of all securities (the market).

I think that John's view of what is going to happen is as good as anybody else's view, but still - a good reminder that the next crash might come (I am sure, it will) - and that it might be the big one (well, for our life times, anyway).

Amazing post. Interesting that Michael Burry posted the same thing as Hussman just today. https://twitter.com/michaeljburry/st...03383589060618

[SBQ]

Amazing post. Interesting that Michael Burry posted the same thing as Hussman just today. https://twitter.com/michaeljburry/st...03383589060618

Mr Burry is still short on Tesla (and by a LARGE margin) - wonder when he will cover his position or will he end up like these hedge funds sensationalists such as Bill Ackman's (his massive loss in Herbalife) ?

Buffet appears to be doing far better than these jolos.

[Entrep]

Burry doubling down https://twitter.com/michaeljburry/st...02913318178816

[winner69]

Hey Hoops, did you see Crestmont’s latest update

Ed’s stuff is interesting. Secular stuff is intriguing …secular trends remain.

Still in secular bear market he says

A couple of quotes from his email:

The current market environment can be summed up in two words: incongruity and divergence

However, the endurance, persistence, and general consistency of reported EPS over several years calls into question whether the normalized measures are no longer relevant. It could be that This Time is Different... {the finger ache from typing those four words lasted for days}

Either way, the next few years for the markets are unlikely to be boring.

With so much incongruity and divergence, it's a good time to diversify risk in this environment, not simply to diversify asset classes.


https://www.crestmontresearch.com/