Outside the Box

Magnifying the Trivial

John Mauldin

September 11, 2006

Today I am pleased to present to you a very thoughtful piece by John P. Hussman, Ph.D., President of Hussman Investment Trust. John manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX, where his investment style is more that of a hedge fund than a traditional mutual fund because of his hedging tactics and absolute return philosophy. According to Morningstar, the Hussman Funds have been some of the better performing mutual funds over the past 5 years.

In his weekly market commentary, John explains why he thinks the markets are caught up in the trivial in the midst of a low stakes environment. He further goes on to discuss the current investment climate and its implications for the risk-averse investor. With the current bull market already past the median duration of past advances, I share some similar concerns with John regarding valuations in the marketplace (I touched on these concerns a couple weeks back in my article titled "Fingers of Instability," which can be viewed here).

I trust that you will enjoy this mentally stimulating piece and find it to be another valuable "Outside of the Box" contribution.

John Mauldin, Editor
Outside the Box

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Magnifying the Trivial

By John P. Hussman, Ph.D.

During my years in academia, there was a line that went "why are the disputes in academia so fierce?" The answer - "because the stakes are so low."

It's not unusual for people to magnify trivial differences when the stakes themselves are trivial. Call it a scarcity mentality. My impression is that this sort of mentality is present in the financial markets here.

Over the past…

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