If it is 65% overvalued(57% for nonfinancials) as q indicates, fair value would be 950. Persnally i believe its valued at about 50% above historical norms. However, im mostly in the market and will remain to be. I can handle the 33% drop to fair value or even beyond and i do have some money on the sideline to invest when appropriate. As for mr hussman, hes lost 33% of his fund mostly due to hedging costs just waiting for better opportunities. My main gripe is that he often talks of how treasury bills outperform stocks at periods of high valuations but provides little reason to own his fund instead of treasury bills. Even in 2008, the fund recorded losses. I think if your afraid of the current market go to cash or bonds and watch hussman, hes a smart guy. Maybe even get in to his fund when he takes a constructive position. I also think hes incorrect about his recent criticisms particularly about mr buffett stating that he thinks hes getting good value, referring to wells fargo and probably ibm. Even in an overvalued market, there are individual stocks that you can buy that will provide good value. Granted, in a large decline even these stocks will likely not be immune but are certainly likely to beat the 10 year return numbers and in the case of these two stocks, they pay back a large amount of their earnings via dividends and buybacks
Just curious where are you coming up with your 50% rather than 65%?
I cannot even imagine a 33% drop. That takes this market back to about 1000 on the S&P and Dow under 10K. I would not expect the Fed to allow this.
It seems like you're one of the investors he refers to when he says "people who have stress tested their style and are prepared to ride out the cycle high and low."
I have made money on my other positions (hey who hasn't) but this has been a real dog and unfortunately I had around 10% of my assets in it several years ago. Now I have a whole lot less than that. Basically I think he's right but wrong. Right that the market is overpriced, wrong that it will come down by any meaningful amount. I mean if Europe in a depression can't #$%$ Wall Street what will.