Exactly right. However, a lot of guys with good track records got out when the S&P had run up to 1050, 1100 a couple years ago. Hussman is the only manager I am aware of who wasn't long for the 666-1050 bit of the run. Now the 1050 to 1900 ish, I can't fully blame him because things look very overheated when you have some stocks going up 100, 200, 500% on no news. It looks like a bubble. Problem is he'd be better off in cash than using those puts since he's just gotten eroded into oblivion. Of course now he thinks he needs a home run to recover lost ground, so puts are his only choice, and in turn he loses again.
My wild butt guess is 10 years from now the S&P 10 year return is about 2% annually including dividends but I don't think he will have done much better and that means the numbers since 2009 will look even worse.
The closest I can think is Black Monday 1987 which I believe would have dropped SVXY nearly 100% if it existed then.
Thank you. I need to play around with the numbers and get more comfortable Right now it seems unlikely VXX would double but it's best to be prepared.
I have been studying this quite a bit. VXX has doubled 3 times since it has existed but the response in SVXY has been different each time. At first I thought a 100% VXX increase would be a 90% SVXY drop but I see now it is not the case. Looks more like 50%.
I am wondering about this a little bit too. The VIX is not low by historical standards so the bull case for SVXY has to just be contango. And it is very small. 3% is not enough of an edge to make it worth playing right now. I would buy very heavy if we either get back to 6 or 7% contango or if the VIX futures get up to 20, in other words SVXY around 50 or lower.
Burns are you long the market now? I have come to believe LIWA must be a fraud otherwise it would be double digits
I have crushed the market averages 4 years in a row so he has not cost me money. I have trailing stops though as yes I feel the market is dangerously overvalued, at least parts are, did you know the Russell 2000 trailing p/e was 81 as of Friday according to the Wall Street Journal, but the forward p/e is only 18, does that seem possible to anyone.
It's a little amazing to me how the stock market goes up every single day and this never seems to.
In this week's comment Mr. Hussman says he is optimistic, but his meaning of optimistic is he thinks the market will crash and then he can pick up some values.
Well, I do think it's true there's an upward bias over time. That's assuming humanity continues to advance. But of course as you say it's ridiculous for the market never to go down. Right now it sure feels to me like 2007/08 when you literally could not find a single person who thought the market could ever go down for any reason. I'm talking professionals, mom and pop, literally out of all the people I either follow in the news or know personally there is not ONE PERSON who thinks stocks could go down. Many of these people even think the market is overpriced. And that is another fact. That is NOT a matter of opinion, it is a fact that stocks are overpriced by all historical measures. Not some measures, EVERY SINGLE ONE.
2X normal p/sales ratio, nearly 2X Tobin's Q, 2X price/GDP, etc.
Of course nobody thinks they will drop 50% not even Hussman. But I have not seen a single person poke any holes in his valuation arguments besides "best on a bad block" "where else can you put your money" etc.
Having said that I am long with trailing stops in my positions. I do have significant profits the past few years like most and I hope we don't open below my stops someday. I have some positions that are up 250% so my stop on those is set for 175% gain. We get a black MOnday I got problems but I don't see it. I think if the market ever comes down (which I am not convinced will happen) it will not happen in one day but over at least a few weeks.
Indeed- this time it's different, it really is. I have begged and pleaded with my family to sell this junk but they have "crash blindness" from 2008. Now don't get me wrong it is patently obvious that stocks are wildly overpriced. But there sure doesn't mean they have to drop.