Tag Archives: History Repeating

John Hussman: Air-Pockets, Free-Falls, and Crashes

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“Every 3-month period of additional zero-interest rate policy promised by the Fed is worth about a 1% premium over historical valuation norms. Another year would be worth a premium about 4%. But with the market more than double historical norms on reliable measures, the Fed would have to promise a quarter of a century of zero interest rate policy before current stock valuations would reflect a ‘reasonable’ response to interest rates. Stocks are not elevated because low interest rates ‘justify’ these prices, but because the risk premium for holding stocks has been driven to zero. We presently estimate negative total returns for the S&P 500 on every horizon shorter than 8 years.”

http://www.hussmanfunds.com/wmc/wmc141013.htm

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Senate approves Obama request to arm, train Syrian rebels

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“The Senate on Thursday easily approved a $1 trillion government-funding bill that gives President Obama new authority to battle the Islamic State in Iraq and Syria (ISIS). While the stopgap bill will prevent a government shutdown on Oct. 1, the vote will be remembered for a controversial provision that allows Obama to start a new training program for rebel fighters in Syria.  Anti-war liberals and some conservatives balked at that request, with some fearing the vote represented a dangerous march to war. Lawmakers skeptical of helping the rebels are fearful that it could be difficult, if not impossible, to ensure the weapons do not end up in the wrong hands.”

http://thehill.com/policy/finance/218248-senate-approves-obama-request-to-arm-train-syrian-rebels

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Teddy Roosevelt and the Road to Pearl Harbor [2009]

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“Historian James Bradley had a fascinating op-ed in yesterday’s New York Times tracing the origins of Japan’s attack on Pearl Harbor back to the foreign policy of President Theodore Roosevelt, who famously intervened in the Russo-Japanese War in 1905 and earned himself a Nobel Peace Prize for his efforts. Yet as Bradley notes, Roosevelt was secretly acting on Japan’s behalf, or as he wrote to his son, ‘not merely with her approval but with her expressed desire.’ Following that, Roosevelt actively encouraged Japan to emulate America’s recent imperial expansion, though the results would prove disastrous in the long-term.”

http://reason.com/blog/2009/12/07/teddy-roosevelt-and-the-road-t

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Ex-U.S. officials hail Japan’s decision on collective self-defense

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“Former U.S. policymakers on Monday welcomed a July 1 decision by the Cabinet of Prime Minister Shinzo Abe to allow Japan to exercise the right to collective self-defense, saying it will invigorate the Japan-U.S. alliance and create firmer deterrence against China’s military buildup and territorial ambitions. ‘Together, the United States and Japan present a partnership that can prevent China from achieving its territorial ambitions through military force,’ it says.  The report calls for integrating China into ‘a rule-based Asia Pacific community’ so as to achieve a more peaceful and prosperous Asia-Pacific region.”

http://www.globalpost.com/dispatch/news/kyodo-news-international/140714/ex-us-officials-hail-japans-decision-collective-self-d

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Beta Is Boss

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“Most investors have no clue about the importance of beta. Instead, they spend most of their time thinking about how to get exposure to stocks, bonds, etc, not about whether they should own them in the first place.  As regular readers will be aware, US stocks (in general at least) are richly valued right now. And that means long-term returns are likely to disappoint.  So, what are the alternatives?  For example, does it make sense to be in bonds?  Unfortunately, the answer is that the same forces that have been pumping up stock market valuations have been pumping up bond valuations too.  One of the most telling charts in finance right now is of the 10-year yield going back more than 200 years.”

http://bonnerandpartners.com/beta-boss/

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A “Hidden” Bear Market Is Brewing

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“In 2000, the ratio of market cap to GDP for the Wilshire 5000 (a good proxy for the US stock market) reached 153%.  This didn’t stop investors pouring money into US stocks… which went on to deliver a negative total return over the next 10 years.  Fast-forward to today, and the ratio of market cap to GDP for the Wilshire 5000 stands at 125%. That’s not as high as at the peak of the dot-com bubble. But it’s higher than at the 2007 peak of the recent credit bubble.  And it’s more than two standard deviations above the average – a measure legendary contrarian fund manager Jeremy Grantham uses to pinpoint a bubble.”

http://bonnerandpartners.com/hidden-bear-market-brewing/

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Bill Bonner: Dancing on Tables with Lampshades on Their Heads…

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“With the addition of Chinese Web portal Alibaba, there are now 44 start-ups preparing to enter the public markets. Each of these has a valuation of more than $1 billion.  The last time there was this kind of action in the IPO market was 2000, just before the dot-com bubble blew up. And the last time stocks were this expensive was 2007, when the subprime/finance bubble blew up.  That was also the last time share buybacks by US corporations passed the $600 billion mark, which they will do again this year.  Yes, dear reader, the party has gotten out of hand – thanks to all the free booze supplied by Ben Bernanke and Janet Yellen. It’s time to look for the car keys.”

http://bonnerandpartners.com/dancing-tables-lampshades-heads-market/

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Obama Follows Bush’s Iraq Playbook

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“Obama speaks of protecting the American people. He means Americans both abroad and at home. Americans of course are free to travel anywhere. If the U.S. government is to have the power to protect or avenge them abroad, it will have to be able to exercise military power globally. Such imperial power, which the government has long exercised, should disturb peace- and freedom-loving Americans precisely because it creates the potential for perpetual war, invites retaliatory terrorism, and requires high government spending and borrowing. It may be taken for granted that a president can go to war when an American is killed overseas, but that kind of power is too dangerous to accept meekly.”

http://fff.org/explore-freedom/article/obama-follows-bushs-iraq-playbook/

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How Empires End

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“Histories are generally written by academics. They, quite naturally, tend to focus on the main events: the wars and the struggles between leaders and their opponents (both external and internal). Whilst these are interesting stories to read, academics, by their very nature, often overlook the underlying causes for an empire’s decline.  When the history is written about the era we are passing through, it will reflect, in large measure, a rehash of the news. As the media of the day tend to overlook the fact that present events are merely symptoms of an overall decline, so historians tend to focus on major events, rather than the ‘slow operations’ that have been the underlying causes.”

http://www.internationalman.com/articles/how-empires-end

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John Hussman: A Warning from Graham and Dodd

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“The fact is that the most reliable valuation measures we identify are generally within just 15-20% of their 2000 extremes, and are already at or beyond levels observed in 1929, 1972, and 2007. Of course, that same advance to extreme overvaluation is also what has raised the total return of the S&P 500 from 2000 until today up to about 3.9% annually. We believe that even that total return is transitory, and presently estimate negative total returns for the S&P 500 on every horizon less than 8 years. We encourage buy-and-hold investors to understand and mentally prepare for the potential depth of interim losses inherent in that strategy (we would presently allow 40-55%).”

http://www.hussmanfunds.com/wmc/wmc140915.htm

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