Sine the 2009 market bottom, John Hussman has remained thoroughly bearish on the economy and the market, so of course he’s greatly lagged the broader market.
Like many others, such as David Rosenberg, he’s beginning to sound pretty defensive.
Consider his latest note.
First he explains his error, and his error basically comes down to: ‘other people are dumb.’
The past few years have been as unusual as any that investors have experienced since the Great Depression, and though we’ve outperformed the S&P 500 since the market peak in 2007, I certainly owe you greater absolute returns. It bears repeating that the source of our “miss” in 2009 and early 2010 was my refusal to view the downturn as a typical post-war recession. While there was no way to avoid major losses prior to the 2009 low without missing a good portion of the early advance in any event, we would have captured a larger portion of the 2009 and early 2010 advance by completely ignoring data related to other post-credit crisis periods. Hindsight is hindsight. I was convinced at the time that what we were observing was “out of sample” with respect to post-war data, and I frankly underestimated the willingness of investors to believe that the underlying structural difficulties of the economy (which still persist in my view) were so easily solved by disabling fair-market accounting disclosure and repeatedly violating the provisions of the Federal Reserve Act (specifically 13c and 14b).
Then he talks about how good his performance has been over certain time periods:
I believe that fiduciaries have the responsibility to discuss the reasoning behind the decisions they make, and should have the maturity to admit where their judgments have been in error. Still, given my view that our investment approach is more sound than ever, allow me to also note what we’ve done right. The Strategic Growth Fund has outperformed the S&P 500 from the 2007 market peak to the current peak, with a fraction of the interim loss. The Fund outperformed the S&P 500 from the 2002 bear market low to the 2009 bear market low. The Fund outperformed the S&P 500 from the 2000 peak to the 2007 peak. The Fund has powerfully outperformed the S&P 500 from the 2000 peak to the present. That is our intended objective – to outperform our benchmarks over complete market cycles with smaller periodic losses than a passive investment strategy.
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