From tomorrow's Market Comment:
"Investors adhering to a buy-and-hold strategy, diversified across asset classes, fully recognizing the potential depth of intervening declines, and committed to remaining passive over the course of the market cycle, are encouraged to adhere to that discipline. If you question your commitment to stay with a buy-and-hold through a difficult period, remember that the best point to shift from one studied long-term discipline to another is when the existing discipline has performed well relative to the alternative. Too many investors abandon studied disciplines when they encounter a period of difficulty, chasing ones that have recently performed well. Unless one also studies that switching strategy and demonstrates that the switching rule is effective over the long-term (which we doubt because it's a recipe for buying high and selling low), the habit of switching between disciplines is evidence of having no discipline at all."
OK, I exaggerated. He is still a market timer, but recent writings have repeatedly positively mentioned buy and hold and Bogle methods as respectable alternatives. Thought it was a good affirmation for us.
John Hussman is almost a Boglehead
Re: John Hussman is almost a Boglehead
Hussman has been making similar comments for some time now. My take is that he is justifying his decision to mostly stay out of the market (which is market timing) while at the same time urging those already in the market to stay the course if they have an allocation which allows them to weather the very bad times which he always expects to arrive soon. He will ultimately prove to be right, much in the same way that a broken clock has the right time twice per day.
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Bill Bernstein
- Posts: 596
- Joined: Sat Jun 23, 2007 12:47 am
Re: John Hussman is almost a Boglehead
Hussman's a very interesting chap; academic economist, very smart, well-informed, and a pleasure to read.
The trouble is that a lot of, if not most, folks in finance are very smart, well-informed, and a pleasure to read. That, unfortunately, does not mean that they're capable of making excess returns, or even the market return, as Mr. Hussman's mutual funds vividly demonstrate. (Hint: log onto Morningstar and look up his four offerings.)
As Warren Buffett has said, finance is not a game where the person with an IQ of 160 beats the person with an IQ of 130. (Since we don't know investors' and fund managers' IQs, most people judge by how smart they sound or how convincing their rationales are.) It's a game where what generally, but not always, prevails are discipline, patience, and liquidity.
If you're lucky enough to have those 3 things, then you don't need gurus.
Bill
The trouble is that a lot of, if not most, folks in finance are very smart, well-informed, and a pleasure to read. That, unfortunately, does not mean that they're capable of making excess returns, or even the market return, as Mr. Hussman's mutual funds vividly demonstrate. (Hint: log onto Morningstar and look up his four offerings.)
As Warren Buffett has said, finance is not a game where the person with an IQ of 160 beats the person with an IQ of 130. (Since we don't know investors' and fund managers' IQs, most people judge by how smart they sound or how convincing their rationales are.) It's a game where what generally, but not always, prevails are discipline, patience, and liquidity.
If you're lucky enough to have those 3 things, then you don't need gurus.
Bill
Last edited by Bill Bernstein on Sun Aug 11, 2013 3:54 pm, edited 1 time in total.
Re: John Hussman is almost a Boglehead
Agree with that. He is one of only a handful that I find a pleasure to read (as I find with Grantham, Bernstein, Bogle, and a few others). What I respect about Dr. Hussman is that he is a data-driven economist and follows a set of fairly transparent rules (which he does "evolve" over time). He admits when he is way wrong too (not a common trait amongst the popular money managers, even when it is painfully obvious). I've learned a lot reading his weekly and respect him as a person and as a philanthropist. I hope he does well over the next few cycles and redeems his methods.Bill wrote: Hussman's a very interesting chap; academic economist, very smart, well-informed, and a pleasure to read.
MB
Re: John Hussman is almost a Boglehead
I like all the posts, above. And, as some others here, I eagerly await the Hussman weekly commentary.
He is so entertaining and impressive that I don't care if he's wrong. He doesn't crow too much when right and admits to being wrong (as mindbogle notes). And he surely has discipline. He also seems a decent guy. I too noted his comparatively recent inclusion of the Boglesque buy-and-hold approach as a non-timing tactic that can work for those gifted enough to endure what such a (long-term) tactic entails.
I do wonder, sometimes, whether Hussman is hampered by knowledge—all the different market indicators he notes that form his present implementation "ensemble" (which had to be adjusted after being wrong post 2008, and might need more adjustment if again the future does not resemble the past).
It isn't enough that he can simply stay long equity, but just scale back exposure at times of his perceived overvaluation, like some do who use the Shiller PE 10 metric, he often cites. But in addition he uses shorts, plus longs on individual stock picks, plus momentary market action assessments, and a gaggle of deep economic modifiers. He stays busy with these every week, thus entailing added expense in implementation, in addition to the number of times he can guess wrong. He calls all this responding to evidence as it emerges. I suppose Bogle might say that the first sign of trouble is that he is responding at all.
As stated above, Hussman will again be right. Perhaps soon. And when that happens he'll take a more "constructive" position. Love reading him.
He is so entertaining and impressive that I don't care if he's wrong. He doesn't crow too much when right and admits to being wrong (as mindbogle notes). And he surely has discipline. He also seems a decent guy. I too noted his comparatively recent inclusion of the Boglesque buy-and-hold approach as a non-timing tactic that can work for those gifted enough to endure what such a (long-term) tactic entails.
I do wonder, sometimes, whether Hussman is hampered by knowledge—all the different market indicators he notes that form his present implementation "ensemble" (which had to be adjusted after being wrong post 2008, and might need more adjustment if again the future does not resemble the past).
It isn't enough that he can simply stay long equity, but just scale back exposure at times of his perceived overvaluation, like some do who use the Shiller PE 10 metric, he often cites. But in addition he uses shorts, plus longs on individual stock picks, plus momentary market action assessments, and a gaggle of deep economic modifiers. He stays busy with these every week, thus entailing added expense in implementation, in addition to the number of times he can guess wrong. He calls all this responding to evidence as it emerges. I suppose Bogle might say that the first sign of trouble is that he is responding at all.
As stated above, Hussman will again be right. Perhaps soon. And when that happens he'll take a more "constructive" position. Love reading him.
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danieljquirk
- Posts: 196
- Joined: Mon Feb 20, 2012 8:16 pm
- Location: San Diego
Re: John Hussman is almost a Boglehead
I happen to catch a recent article by Hussman, and then it led me to look at his performance since inception. Below is the link from his website, which claims 3.03% per year.
http://www.hussmanfunds.com/pdf/hsgperf.pdf
But this doesn't seem to jive with the fact that the current price of his fund, HSGFX, which is $9.21. It looks like the IPO price was $10.00 in July 2000. If the return calculations assume that any dividends were reinvested, should that mean the cumulative annual return was approximately -8.0%, and that the average annual return was something like -0.5%?
Any thoughts?
http://www.hussmanfunds.com/pdf/hsgperf.pdf
But this doesn't seem to jive with the fact that the current price of his fund, HSGFX, which is $9.21. It looks like the IPO price was $10.00 in July 2000. If the return calculations assume that any dividends were reinvested, should that mean the cumulative annual return was approximately -8.0%, and that the average annual return was something like -0.5%?
Any thoughts?
Re: John Hussman is almost a Boglehead
I don't take everything Buffett says at face value. Reading the biographies of Buffett by Schroeder and Lowenstein, it's obvious that he is extremely smart. So was his mentor, Benjamin Graham.Bill Bernstein wrote:As Warren Buffett has said, finance is not a game where the person with an IQ of 160 beats the person with an IQ of 130.
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beammeupscotty
- Posts: 182
- Joined: Thu Jan 21, 2010 8:13 am
- Contact:
Re: John Hussman is almost a Boglehead
Since it's actively managed, it probably had more distributions than dividends alone. 3% looks about right ($10K -> $15.8K over 15 years).danieljquirk wrote:I happen to catch a recent article by Hussman, and then it led me to look at his performance since inception. Below is the link from his website, which claims 3.03% per year.
http://www.hussmanfunds.com/pdf/hsgperf.pdf
But this doesn't seem to jive with the fact that the current price of his fund, HSGFX, which is $9.21. It looks like the IPO price was $10.00 in July 2000. If the return calculations assume that any dividends were reinvested, should that mean the cumulative annual return was approximately -8.0%, and that the average annual return was something like -0.5%?
Any thoughts?
