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Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

hussmanfunds.com

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Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#71

Post by icebraining »

rbcgerard wrote: post #29
runako wrote: post #13

Earlier quoted context omitted.

This company has ~$750mm under management, and has several funds that manage to have both a) high expense ratios and b) horrible performance over the short and long terms. Serious question, for those who work in finance: how do companies like this stay in business? Shouldn't the transparency of their poor performance have long since driven them out of business? Semi-serious question, also for those who work in financ…

go on morningstar (or below) and look at the chart for the entire life of the fund, you'll see that he had periods of massive outperformance http://quotes.morningstar.com/chart/fund/chart?t=HSGFX&regio...

It's probably a stupid question, but doesn't that ignore the dividends?

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#72

Post by dmoy »

aaavl2821 wrote: post #67
runako wrote: post #13

Earlier quoted context omitted.

This company has ~$750mm under management, and has several funds that manage to have both a) high expense ratios and b) horrible performance over the short and long terms. Serious question, for those who work in finance: how do companies like this stay in business? Shouldn't the transparency of their poor performance have long since driven them out of business? Semi-serious question, also for those who work in financ…

Funds like this tend to outperform in bad to normal markets and underperform in highly bullish markets as they have more discipline around valuation. Warren Buffett famously underperforms in very bullish markets as well The pitch of funds like this is that for a few years out of 10, they'll underperform, and then massively outperform when everyone else is sucking. People invest in funds like this (note I don't know t…

Underperform sure, I get that. Negative performance, when you're getting like >15% s&p 500 growth for year after year? If that's what GGP is saying that's really bad.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#73

Post by dsr_ »

runako wrote: post #13
pdog wrote: post #5

This guy expects a market loss of about -65%, which would send the S&P 500 back down to 900. He also expects negative total returns over the next 12 years. Of course, his Strategic Growth Fund has not only underperformed its benchmark (the S&P 500 index), the fund actually has negative returns over the past 1, 3, 5, and 10 year periods[1]. Losing money in this market is a truly remarkable feat. [1]: https://www.hussm…

This company has ~$750mm under management, and has several funds that manage to have both a) high expense ratios and b) horrible performance over the short and long terms. Serious question, for those who work in finance: how do companies like this stay in business? Shouldn't the transparency of their poor performance have long since driven them out of business? Semi-serious question, also for those who work in financ…

Never underestimate the role of salesmanship in the success of convincing people to give you their money.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#74

Post by icedchai »

junkscience2017 wrote: post #3

Lots of permabears will go long when it's obvious markets are headed up, not Hussman. https://www.hussmanfunds.com/strategic-growth-fund/ As always, Hussman manages the near impossible feat of reliably losing money in virtually any market environment The Dow has risen 5k in a year and Hussman still manages to be in the red....I'm sure his clients are thrilled on top of the how-is-that-possible string of losses in eve…

Since Inception (07/24/00): 0.54% It truly is amazing. You'd have to really try to do that bad.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#75

Post by lmm »

philiphodgen wrote: post #24

I look beyond the “there’s a crash coming” sentiment. In that opinion, he is like all other pundits yammering on CNBC: entertaining rather than enlightening. What I like about his article is the insight — new to me — about the nature of paper wealth vs real wealth. He described it in a way that is useful and enlightening to me. The assertion that a security (stock, bond) is not an addition to net wealth — just a zero…

Trade is a wealth creation mechanism, because different people assign different values to things. When a baker exchanges some loaves of bread with a carpenter for a table, wealth is created: they're both rational actors who know that the thing they're getting is worth more (to them) than the thing they're giving away. The same is true when the baker sells bread for money. The same is true when they issue a bond for their baking business. Of course the bond just moves money around, but a lot of wealth creation consists of moving things around rather than directly building a physical thing.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#76

Post by oblio »

adventured wrote: post #33
junkscience2017 wrote: post #12

Earlier quoted context omitted.

right, lots of fund managers accept that crashes happen periodically...the permabears like Hussman assume they STAY low over a long period of time yet society retains enough order to let them fulfill their thesis if the market crashed that low for a decade, you would see massive regime change in every democratic nation and the rich would be stripped bare

> if the market crashed that low for a decade, you would see massive regime change in every democratic nation and the rich would be stripped bare That wouldn't happen at all in fact. We've already recently seen that kind of economic pain on a protracted time frame. See: 1967 to 1982, a time in which inflation adjusted the S&P 500 lost 2/3 of its value. Stagflation, high unemployment, high inflation, economic chaos, p…

The common theme is that the majority of people were not starving. That's how revolutions are fueled. None of the countries you listed were facing actual famines.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#77

Post by whatshisface »

wiredfool wrote: post #35
dumbfounder wrote: post #31

Earlier quoted context omitted.

Predicting that a downturn will happen is easy. A downturn will probably happen if stocks are significantly inflated (by some reasonable measure). Predicting WHEN is the hard part. He's just 10 or so years off the mark :)

I've predicted 8 of the last 3 downturns. Dooooooom I tell you.

>I've predicted 8 of the last 3 downturns.

This is a great phrase. However, ideally a good portfolio has hedges and hedging against a big downturn is something you'd want to do. You don't have to give all of your money to the doomsayer portfolio, but I imagine that it'd be wise to have just a little there.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#78

Post by csomar »

brooklyntribe wrote: post #37

Ok, so if you think the hell thing is going to hell, just go SHORT, it's one click away. How simple is that? And that's why these predictions never pan out, if it's SO EASY to make a ton of cash off a crashing market, then EVERYONE will go short, since it's so EASY to make money. And that's why markets are generally stable and it's what humans do best, we go LONG. :-)

Might explain his bad fund performance.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#79

Post by csomar »

pdog wrote: post #5

This guy expects a market loss of about -65%, which would send the S&P 500 back down to 900. He also expects negative total returns over the next 12 years. Of course, his Strategic Growth Fund has not only underperformed its benchmark (the S&P 500 index), the fund actually has negative returns over the past 1, 3, 5, and 10 year periods[1]. Losing money in this market is a truly remarkable feat. [1]: https://www.hussm…

The market can stay irrational more than you can stay solvent. That doesn’t mean he is right. He is in the business of making money with money but not figuring out if the market is sane or crazy.
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