ebook essays pieces of the puzzle
Tuesday, September 18th, 2012
still drumming

In May 2011, I did a posting (entitled, “his own drummer”) on John Hussman, which included a chart of the performance of Hussman Strategic Growth Fund (HSGFX).  The top two panels above extend the chart from that earlier piece.  At bottom is the fund’s total net assets (presented despite some data gaps).

I’m revisiting this now because Hussman’s Monday commentary said its “estimates of prospective return/risk for the S&P 500 have dropped to the single lowest point we’ve observed in a century of data.”

Yesterday I lamented that fund managers are not sufficiently active.  That’s not the case with Hussman.  But the issues from sixteen months ago remain:

“Is the poor relative performance during the last two years an anomaly in an otherwise solid long-term record, a necessary condition given the discipline Hussman applies in distorted markets, or the start of a prolonged period of fighting the trend and never getting back the performance edge? Given the conditions he cites, Hussman thinks that the market faces a major challenge over the next year. Perhaps not coincidentally, it should be a pivotal time for his firm’s performance and his reputation as well.”

The year that passed brought no real change, except some dings to that reputation and a drop in assets.  Hussman remains very bearish and another round of QE has commenced.

A closet indexer he is not.  By definition, he is playing a long-term game and has made that very clear to his clients.  We will have to wait and see whether it was worth it.  (Chart:  Bloomberg terminal.)