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
Magnifying the Trivial
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…