An Optimistic Route to a Poor Market Outlook

Value is a big and well-known strategy within the investment world. Many analysts and investors alike rely heavily on the P/E ratio as a metric to determine the value of a stock, indices or other form of security. But just as with any other investment metric, the data can be skewed if not viewed within the proper context. This week's Outside the Box is by John Hussman where he discusses the importance of analyzing P/E ratios under the backdrop of the earnings cycle. John shares his view on "normalized" earnings as well as explains how he calculates the averages over a 5 year period.

Dr. Hussman is the president and principal shareholder of Hussman Econometrics Advisors, the investment advisory firm that manages the Hussman Funds. He is also the President of the Hussman Investment Trust. Prior to managing the Hussman Funds, Dr. Hussman was a professor of economics and international finance at the University of Michigan. He continues to write his "Weekly Market Comment" that provides both excellent insight and analysis into the current market climate.

I trust that you enjoy Hussman's research and find it to be valuable to thinking "outside the box."