Outside the Box

Market Internals Go Negative

John Mauldin

July 30, 2007

Will the market rebound this week or continue last week's slide? Will the credit markets stop their turmoil? These are all questions that investors are confronted with by the financial press. In today's "Outside the Box," we will focus our attention on a well-thought out piece by John Hussman, Ph.D. John is the President of Hussman Investment Trust where he manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.

In his Weekly Market Comment, John addresses the recent market volatility and puts it in historical perspective, comparing it in duration to that of previous market cycles. We have currently gone almost 1200 days without a 10% correction, the second longest such period on record.

So, how does a money manager with these views cope in today's market? I keep John's comments about what he is doing in his fund so you can see what this highly regarded professional to hedge his bets. I think you will find what he is doing to be instructive.

While most investors continue to watch their streaming ticker for new record highs, we are patiently waiting for the raw data to form our investment decisions. I believe you find this commentary to be both valuable and "outside the box."

John Mauldin, Editor
Outside the Box

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Market Internals Go Negative

John P. Hussman, Ph.D.

Well, that was abrupt.

Though the stock market registered fresh highs only a few sessions ago, the total return on the S&P 500 is now about even with Treasury bills for the period from mid-December to the present. Given the steep decline, the market probably deserves a clearing rally by now (which is no assurance we'll observe one). Still, it's important to recognize that the recent…

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