Stock Market Crystal Ball

There were a couple of interesting articles in the investment industry press yesterday that I feel the urge to share with everyone.

First is “Ignore the Gurus“, by Scott MacKillop from Wealth Management magazine. My favorite pull-quote: “The guru Hall of Fame is an empty room.” It seems that market predictor gurus will, about half the time, miss the mark by more than 9%. We probably ought to stop listening to them … but we probably won’t.

Second, and an interesting example of the first, is “Measuring the Bubble” by John Hussman (the John Hussman, of the Hussman Funds). He is very, very, very worried about the markets in the near future: “I expect the S&P 500 to lose approximately two-thirds of its value over the completion of this cycle.” Conveniently, he doesn’t say when that might be, what might prompt it, or how we might know when it’s imminent — unless maybe it’s imminent right now. He appears to refer to the period since 2009 as “this half-cycle”, and that there’s no way to predict what the trigger of any market crash might end up being, but … well, he’s kinda hazy.

One thing he’s not hazy about, though, is explaining why his persistent bearish calls since 2009 have been so consistently wrong: The markets responded to the Fed’s zero-interest-rate policies just the way the Fed wanted them to, and he did not — and “it was only late last year that we finally threw up our hands” and moved to a neutral stance.

But still we should believe John Hussman when he predicts with some conviction that the S&P 500 will “lose approximately two-thirds of its value” sometime soon-ish. Uh-huh.