Renowned market bear John Hussman lays out why he thinks the S&P 500 is in for a tough, money-losing road ahead.
as they were ahead of the 1929 and 2000 market crashes. And he views the post-December rebound as the latest in a long series of bullish head fakes built on irrationally exuberant sentiment.
."Glorious half-cycle market advances leave investors vulnerable to catastrophe, because investors hold contempt for anyone who suggests there may be a cliff on the other side of the mountain."What kind of catastrophe is Hussman expecting? His expectation for a two-thirds loss in total market value is well-documented at this point.
The scatter plot below offers a look at how Hussman is thinking about the matter. It shows the relationship between the ratio of market cap to corporate gross-value added, relative to subsequent 12-year returns. As you can see, that ratio is currently close to the lowest on record.
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