Gregory White
Business Insider
5/2/2011
Current market conditions mimic those seen in four of the biggest post-war market declines in U.S. history, according to John Hussman.
Hussman considers this “overvalued, overbought, overbullish, rising-yields syndrome” market similar to those of 6 others in recent history, and more “extreme” than any of those moments.
In previous instances where markets fit Hussman’s criteria, this is what occurred, according to Hussman:
August 1972, November-December 1972: The S&P 500 quickly retreated about 5% from its August peak, then advanced again into to its bull market peak near year-end (about 6% above the August peak). The Dow then toppled -12.3% over the next 50 trading days, and collapsed to half its value over the following 22 months.
August 1987: The market advanced about 6% from its initial signal into late August. The S&P 500 then lost a third of its value within 8 weeks…
The article continues at Business Insider. Also at the site, How to Prepare for Stock Market ‘Turning Points’ and Make Profit From Change.
…In a stunning display of determination (or simple greed), U.S. stock prices are once again at new highs – despite problems in the Middle East, out-of-control government deficits throughout the world, an increasingly inflated China and the looming end to the U.S. Federal Reserve’s free-money boondoggle, otherwise known as “QE2.”
Should you be worried about a stock-market reversal?
I know that I am.
But here’s the thing: While there’s no question that a stock-market breakdown could derail the best of investing intentions, it doesn’t have to derail your financial future. More to the point, if you understand when stock-market “turning points” are likely to occur, you can establish positions or trades ahead of time that will yield profits when those expected transitions actually come to pass…
Update: DOOM! — An experimental one-act play by Ben Bernanke and Timothy Geithner; Barack H. Obama, Producer at Ace of Spades HQ
It turns out that economists are less like scientists than they are used-car salesmen. That goes double for academic economists. Part of this is because economics has the veneer of the hard sciences about it (math and statistics), but it’s really more related to sociology and psychology. And plain old patent-medicine voodoo. Its practitioners (especially in the academy) are more prone than most to fads and ideological philosophies that run counter to plain common sense…
