Contrarians At The Gate
February 6, 2006
This week's letter is from 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 and writes his Weekly Market Commentary.
Following are two recent Weekly Market Commentaries that touch on contrarian investing and price movements in the markets. Last week, James Montier told us that to succeed in investing you need to take a contrarian approach, but Hussman says "not so fast," and that always being contrarian may not be the best idea. Sometimes it is a good idea to go along with the crowd.
In the second part, Hussman explores a common belief, seen everyday in the media, that money moves into and out of the markets. However for every seller there is a buyer and the movement of markets is based on perceived value rather than money flows. As always Hussman has some interesting insights and that is why these were picked for this week's Outside the Box.
Omitted Variables
August 22, 2005
This week's letter is from John P. Hussman, Ph.D., President of Hussman Investment Trust. His firm is one of the few that has employed hedging techniques, similar to the hedge fund world, in a mutual fund structure. John is also one of the really, really, really smart guys in the running money business. John manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.
Hussman's Weekly Market Commentary on August 22, 2005 takes a look at the relationship between stock market valuations, interest rates and inflation. He takes a look at what has happened to this relationship in the past and fills in the "omitted variables" other market cheerleaders seem to leave out.
This is a very short piece, but it is an important analysis of market valuations and why some people (including the Fed) might not be seeing statistical relationships the right way.
Don’t Discount Discounted Dividends
April 11, 2005
This week's letter is from John P. Hussman, Ph.D., President of Hussman Investment Trust. His firm is one of the few that has employed hedging techniques, similar to the hedge fund world, in a mutual fund structure. John is also one of the really, really, really smart guys in the running money business. John manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.
Hussman's Weekly Market Commentary on March 21, 2004 takes a look at the importance of dividends to long term returns. Many readers know that in my past letters and book I point out the role dividends play in the total return to investors. Equity valuations are high and dividend levels are low so the buy and hold market cheerleaders, who trot out their long term average market return studies, won't help you much unless your time horizon is 70 years.
This commentary does a great job of explaining the role of dividends and why equity returns may not be as high as the long term market average over the next 10-15 years and that is why it became this week's Outside the Box.