Soaring

VALUATIONS!

Whether or not we’re at a market peak, we were already defensive based on extreme valuations, unfavorable internals, and overextended conditions. If you’re a passive investor, my intent is not to encourage you to abandon your discipline. What I do believe, however, is that this is an extraordinarily good moment to examine your risk exposures and to take them seriously.

If your notion of passive investing doesn’t allow for a realistic possibility of a market loss well in excess of 50%;

Or a decade or more in which the S&P 500 lags Treasury bills, you’ve not only decided to be a passive investor, you’ve decided to ignore History.

So, whatever your discipline, examine your risk exposures.

John Hussman of the Hussman Funds