Tag: hussman

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Best and Worst 12-Year Investment Periods Throughout History

“Those who cannot remember the past are condemned to repeat it.”

With that in mind, let’s review the past so that we might catch a glimpse into the future.

The three best 12-year annualized forward returns for the S&P 500 (including dividends) going back to 1928 were:

  • 19.0% (1988-2000)
  • 18.3% (1950-1962)
  • 18.2% (1944-1956)

An annualized return of 19% implies a $100,000 portfolio grows to over $805,000 in twelve years!

The three worst 12-year annualized forward returns were:

  • -2.8% (1930-1942)
  • -2.4% (1929-1941)
  • 0.5% (2000-2012)

An annualized loss of 2.8% implies a $100,000 portfolio declines to about $71,000 in twelve years.

For context, the very long-term annualized return for the S&P 500 is around 10%. So we observe there is tremendous amount of volatility in even 12-year periods. Continue reading “Best and Worst 12-Year Investment Periods Throughout History”

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Meme Stocks, Bored Monkey Pictures, Digital Pokémon

“The real problem is that a decade of experimental distortion encouraged unprecedented speculation in every conventional asset class, not to mention fringe speculation in assets detached from any standard of value, including meme stocks, pictures of bored monkeys, and digital Pokémon posing as ‘currency.’ As with every similar episode across history, the unwinding of this bubble in the form of financial crisis is already quietly baked in the cake.”

– Dr. John Hussman, “Central Bankers Wandering in the Woods” September 2023

Today we update Treasury bond and U.S. stock market forward return estimates.

Treasury bond return estimates are very easy. It’s simply the current yield offered by the bonds… assuming the U.S. government doesn’t default of course. Here are the current annualized yields for various maturities: Continue reading “Meme Stocks, Bored Monkey Pictures, Digital Pokémon”

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The Distinction Between Stock Prices and Wealth

First, thank you to everybody who took the time to watch the news clip from yesterday and for the kind feedback I received from many of you.

This evening, as Facebook is down over 20% after-hours, I wanted to share an eloquent explanation of an important concept: the distinction between WEALTH and STOCK PRICE.

Dr. John Hussman wrote an interim special commentary back in November. Within it, there is a section that provides important perspective. It’s so well-stated I’m simply going to share it verbatim. The bolded parts are my emphasis. Enjoy. Continue reading “The Distinction Between Stock Prices and Wealth”

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Market Update – Only Two Other Times in History

The rally that began around Christmas Eve continued with strength through last week.

It’s been such a strong rally that U.S. large company stocks (as measured by the S&P 500 index) even eclipsed the prior record high from last September…admittedly, an event of which I was skeptical.

Specifically, on September 21st the S&P 500 set a new intra-day high at $2,940.91. However, last Wednesday the S&P 500 touched $2,954.13 before closing down to $2,923.17. As I write this commentary on May 6th, the S&P 500 is trading around $2,910.

Now, unfortunately, the S&P 500 was the only major index to set a new high. U.S. small company stocks (Russell 2000) are still down over 8% from their August 31st record. The global stock market more broadly, including foreign developed and emerging markets (MSCI All Cap World Index), is still down over 6% from it’s all-time high set almost 16 months ago on January 26th, 2018. Yes, the global stock market is still technically in a bear market.

Here is the interesting part, when reviewing one of the most reliable valuations metrics available from John Hussman, we find that the U.S. stock market has experienced current extremes only two other times in history (1) 1929: on the eve of the Great Depression and (2) 2000 – on the eve of the Dot Com Bubble burst. Neither of those events ended well, and I don’t expect the current dislocation to end well either. Continue reading “Market Update – Only Two Other Times in History”