Hussman does not meet with the companies he is invested in (at least, that is my impression). If he were meeting with CEO, CFOs, etc, he would grasp that these companies are ripe with cash flow and that GAAP earnings underestimates earnings power. Yes, profit margins are on the high end of their historic range, but that doesn't mean a whole lot given where interest rates are, the historically cheaper cost of labor (globally), and the advances in technology. In 2009, US corporations were hemorrhaging cash, today they are generating billions in excess cash flow. The whole world is awash in cash. Total household savings currently equals the entire market cap of the S&P 500 at $14 trillion.
It is absolutely ridiculous to have zero market exposure here. Backward looking econometric models are garbage!
Sean, have you seen the relative outperformance of DAX vs. DJIA over multiple time horizons, indicating how overbought everything Europe is? Besides, it's a socialist hellhole (outside Germany), so why would you want to invest there longterm---I have a friend, an Eriksson from Sweden, who immigrated to the US because he couldn't take the socialist mindset anymore? The easy pickings are gone last year, unfortunately for many of us. Besides, with bloated governments everywhere including in the US, I don't think the CB cabal can afford high interest rates anytime soon.