John Hussman’s investment actions seem far less bearish than his words.
Despite warnings of an overbought and overvalued market, he increased his market exposure lately. Even just maintaining exposure would have been more bullish than we’ve judged him from his commentary.
He’s even looking to potentially buy on dips:
Hussman Funds: Suffice it to say that on last week’s market weakness, we established a bit of net market exposure (about 5%), and also re-established a modest “contingent” position in call options that should allow us to generate exposure to market fluctuations in the event that the market advances further (without subjecting us to a great deal of downside risk if the market continues lower). Aside from those incremental changes, the Strategic Growth Fund remains well-hedged. If the market declines further, without marked deterioration in internals, I expect that we will add another incremental amount of market exposure. On any meaningful deterioration in market internals (with or without obvious weakness in the major indices), the Fund will shift to a fully defensive and tightly hedged stance.
In any event, I continue to place a great deal of focus on risk management here. I frankly don’t trust the prevailing view that the economy is in a sustainable recovery. It’s quite possible we’ll see ourselves reversing last week’s modest increase in exposure and moving back to a fully defensive stance, but we’ll let the data drive that decision. For now, we’re doing our best to maintain equanimity about market direction, while keeping defence as our primary concern.