Friday, May 18, 2012

The US Stock Market is Dangerously Over Leveraged

Dancing at the Edge of a Cliff

John P. Hussman, Ph.D.

Quote: "our estimate of the prospective return/risk profile in stocks, based on a range of horizons from 2 weeks to 18 months, could hardly be more negative. In general, similar instances have been followed by market losses of 20-25% or more over a fairly short period. The outcome may not be as negative as we expect in this specific instance, and there is no universal law of physics that requires the market to adhere to these norms, but we have little basis to expect market risk to be appropriately rewarded here. Strategic Growth and Strategic International remain tightly hedged. Strategic Dividend Value is hedged at about 50% of the value of its holdings - its most hedged position."(John P. Hussman, Ph.D.)

http://www.hussman.net/wmc/wmc120514.htm 

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