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Bear Trader Subscriber Notice 02/23/21

There have been two recent discoveries that are relevant to the Bull Vix algorithm’s open VXX and UVXY positions:   The clustering of BSAs. Four periods from 1999 to 2021 in which a minimum of four BSAs were clustered within 6 to 11-week timeframes.  For the...

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Random Thoughts from the Frontline

Readers often ask how these letters appear so regularly. The answer is we have a process. Normally, I talk to my associate Patrick Watson on Monday about the next weekend’s letter. We both go into research mode, verbally outlining a letter, and by Thursday I have an...

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Overstimulation Risk

Among the many strange, unforeseen changes of the last year is a new respect for Keynesian economic theory. Practically everyone in power now agrees that deficit spending produces GDP growth. They differ only on its expected magnitude and duration. The few exceptions...

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Prepare for the Bear

The peaking process that the S&P 500 must go through after its 4th “Perilous Peak” since 1881 occurred in January 2021 is well underway. The S&P 500 must churn at the high to provide the fuel for the first double-digit correction since March 2020 to occur. ...

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Controlling the Curve

If time is money, then interest rates are the price of time. The most important interest rates in the world are for US Treasury securities. This is why I’ve long said it makes no sense for a committee to set those rates. The markets could do just fine without that...

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Technically Speaking: Is A Larger Correction Coming?

In last week’s Technically Speaking post we discussed why we reduced risk in anticipation of a pullback in the markets. However, there are some warning signs which beg the question “is a larger correction coming?” A Tough Start What started out as a promising January,...

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Detached Parabolas and Open Trap Doors

  John P. Hussman, Ph.D. President, Hussman Investment Trust February 2021 The nutshell is this: the old line economy stocks just don’t work because they have earnings and eventually rising interest rates impact earnings. New economy stocks have no earnings, so...

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Inflation and Broken Windows

I’m often asked if I foresee inflation or deflation. This week we had an “Ask Me Anything” session for Alpha Society members and it came up several times. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I...

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Technically Speaking: Why We Reduced Risk Last Week

Why we reduced risk last week. During the last few weeks, I have discussed the rising levels of exuberance in the markets. On Friday, I tweeted the following: Money flows very close to flipping negative. I might be a few days early but we are dropping #equity exposure...

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Forecast 2021: The Stock Market

This will be the third part of my 2021 Forecast Series. You can read the first two parts here and here. The general theme has been “On the Gripping Hand.” Science fiction writers imagined a three-handed alien race with a left hand, right hand, and a very strong...

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S&P 500 at 3rd Perilous Peak since 1929!

On January 8, 2021, the S&P 500 reached its third Perilous Peak since 1871 according to the Extreme Analytics (EA) algorithm.   Recently concluded research of empirical data revealed that 1929 and 2000 were the first-ever Perilous Peaks for the S&P 500 since...

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The Speculative “V”

  John P. Hussman, Ph.D. President, Hussman Investment Trust January 2021 It’s essential to monitor the uniformity of market internals, because investors still have the speculative bit in their teeth. The problem is that this has also often been true at the very...

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The Grip Tightens

This is part two of my 2021 forecast series. I began last week (you can read it here) discussing a three-handed alien race envisioned by science fiction writers Jerry Pournelle and Larry Niven. They had two regular hands and a third “gripping hand,” which though less...

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Year of the Gripping Hand

This week’s letter is the first part of my 2021 forecast. There is simply too much to cover in one letter, and today we’ll start with the most important factor, a known unknown, that I think will be the driver for 2021. Before beginning, I want to make two points, one...

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Waiting For The Last Dance

Executive Summary The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be...

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Bull Vix: Vicious Accuracy

The Bull Vix now has vicious accuracy due to its new algorithm.  The results from a 10 year backtest indicated that the algorithm’s performance for its defined trading periods after an occurrence of a Bullish Sentiment Anomaly (BSA) were flawless.  The Bull Vix...

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A Good Response to a Bad Situation

  John P. Hussman, Ph.D. President, Hussman Investment Trust Late-December 2020 In traditional financial theory, interest rates are a key component of valuation models. When interest rates fall, the discount rate used in these models decreases and the price of...

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Stock Market Party

"History repeats itself, that's one of the things that's wrong with history.” The end of 2020 has me looking back. I started writing the letters that later became Thoughts from the Frontline back in the late 1990s. Similar to COVID-19 today, we had a giant macro issue...

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Survival of the Biggest

The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process… At the heart of capitalism is creative destruction. …Situations emerge in the process of creative destruction in which many firms may have to perish that...

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Elites on the Edge

Growing income and wealth inequality were on my (and probably your) radar screen long before COVID-19 came along. The pandemic has made them both more obvious and more urgent. The actions by the Federal Reserve have widened the gap. We are now in a situation where...

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Hypervaluation and the Option Value of Cash

  John P. Hussman, Ph.D. President, Hussman Investment Trust December 2020 One of the most insidious ideas foisted on investors by Wall Street, in tacit cooperation with activist policy makers at the Federal Reserve, is the fiction that zero interest rates offer...

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The Financial Fire Trucks of 2021

A Happy Thanksgiving weekend to all my US friends. This year was different for many of us—sometimes by choice, sometimes not. But there’s one bit of good news I think we can all share: The holiday season means 2020 is almost over. Soon, we’ll be able to turn the page....

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The Great Reset vs. The Great Reset

In baseball, there is a situation where a base runner is sprinting to home plate and can’t see what is happening behind him. Totally focused on scoring, he doesn’t know if the outfielder is throwing a ball that will reach home plate first. That’s where we get the...

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Pushing Extremes

  John P. Hussman, Ph.D. President, Hussman Investment Trust November 2020 The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can’t have your cake and eat it. You can enjoy it now, or...

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Premature Vaccine Rally to soon Fizzle!

Article edited on 11/15/2020 The stock market rally after Pfizer announced that its Coronavirus vaccine had 90% efficacy was premature since the vaccine: Now in stage 3 clinical trials has been fast tracked by FDA for emergency use ONLY Must finish Stage 3 and also...

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A Chance for Normalcy

Last week I talked about the polls misleading us. I, for one, didn’t see a high probability of a Biden presidency combined with a Republican Senate. But, pending recounts, legal actions, and some run-off elections, that’s probably what will happen. We will muddle...

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Complexity Wins Again

Here in Puerto Rico we are now an hour ahead of Eastern Time, as we don’t do daylight savings time. I stayed up much later than normal on election night to watch the returns. I knew fairly early, when Florida and North Carolina looked so close, we weren’t going to see...

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BullsNBears’ Four Election Outcome Scenarios

There are four possible post 2020 election outcome scenarios which will determine the direction of the US stock market through November 2022:  Republican President/Republican Senate/ Democrat House Republican President/Democrat Senate/ Democrat House Democrat...

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What Will Not Change

“If I have seen further it is by standing on the shoulders of Giants.” If you feel a bit overwhelmed, you’re not alone. A lot is happening right now. The US has a big election next week. We’re all on edge about the pandemic, which appears to be getting worse again,...

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The Green Shoots of 2020

Appearing on 60 Minutes, Fed Chair Ben Bernanke said the recession’s end was in sight because the Fed’s asset purchases were generating “green shoots.” They turned out to be slow-growing shoots. The US unemployment rate kept getting worse for seven more months...

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Herd Mentality

  John P. Hussman, Ph.D. President, Hussman Investment Trust October 2020 That the rate of interest will be lower when commerce languishes and when there is little demand for money, than when the energies of commerce are in full play and there is an active demand...

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Market Stumbles As Stimulus Hopes Fade 10-16-20

In this issue of “Market Stumbles As Stimulus Hopes Fade.” Hopes For More Stimulus Election Night Risk Economic Disappointment Portfolio Positioning Update MacroView: Recessions Are A Good Thing, Let Them Happen Sector & Market Analysis 401k Plan...

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Caught in a Debt Trap

We're caught in a trapI can't walk outBecause I love you too much baby Elvis Presley’s rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldn’t work, but was also impossible to escape. That’s also a good way to...

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Market Regains Footing On Hopes Of More Stimulus

In this issue of “Market Regains Footing On Hopes Of More Stimulus.” Hopes For More Stimulus Market Regains Its Footing Policies Over Politics Portfolio Positioning Update MacroView: The Second Derivative Of More Stimulus Sector & Market Analysis 401k...

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Timeline to the New Normal

Like everyone else, I am weary of this pandemic mess. I want to travel freely, enjoy dinner with friends, hug, and shake hands. And, of course, I want everyone who lost jobs and businesses to get them back. I wasn’t thrilled with the economy a year ago, but I’d take...

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Debt Bugs and Windshields

"There is no means of avoiding the final collapse of a boom brought about by credit expansion." —Ludwig von Mises Economic recovery is coming, we are told, because the economy has found a new equilibrium. We are supposedly adapting to the new-normal pandemic world,...

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Great Reset Update: $50 Trillion Debt Coming

Amid all 2020’s new problems, it’s easy to overlook the old ones. Yet they are still there and, like a silently spreading virus, silently getting worse. One such problem is debt, and specifically government debt. All debt shares one common characteristic. A bill comes...

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Stall Speed Economy

When Cornwallis surrendered to George Washington at Yorktown in 1781, tradition has it that the British band played an old English children’s folk tune, “The World Turned Upside Down.” Painting by John Trumbull If buttercups buzz’d after the bee,If boats were on land,...

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On the Question of Current and Future Lockdowns

Simply discussing COVID-19 will undoubtedly make this letter controversial and, in some circles, political. That is not my intent. I truly believe that something affecting all of us so deeply should be kept in the scientific realm to the extent possible, not the...

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The 1998 Correction & The Run To The Peak

Over the last few months, the markets have become engulfed by a palpable feeling of exuberance. I remember the last time investors were engulfed in a near “panic” to invest. It was 1998, where following a correction, the market began a seemingly endless...

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Inflation Virus Strikes Fed

One little-noted aspect of central bank policy is how rarely “policy” happens. Officials at the Federal Reserve and elsewhere long ago learned how to achieve their goals without actually doing anything. Creating perceptions is often enough to modify people’s behavior....

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Yikes

  John P. Hussman, Ph.D. President, Hussman Investment Trust September 2020 The most striking similarity between the 1920s and 1990s bull markets is the notion that traditional measures of stock valuation had become obsolete. – Edward Chancellor, Devil Take The...

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#MacroView: A Tale Of Two Bull Markets

It’s a tale of two bull markets. One part of the market is trading as you would expect with near depressionary economic numbers. The only description for the other part is “insane.” In last week’s #Macroview, we discussed that “March Was...

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Light in the COVID Tunnel

If you ever think you just can’t win, I know how you feel. I’m labeled both a doomsayer and a Pollyanna—sometimes in reaction to the same letter. In fact, I am neither. I used to be the “muddle-through” guy who acknowledged difficulty but expected eventual success....

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Business on the Frontline

I write this introduction from an all-too-short vacation in Montana (more below). This week I have asked my longtime associate Patrick Watson to step in and write Thoughts from the Frontline, offering his perspective as a small business owner. As you read this,...

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The Second Great Depression… But Not Really

"It's a recession when your neighbor loses his job; it's a depression when you lose yours." —Harry S. Truman, 33rd US President In recent weeks, numerous commentators started to suggest the US and the world are entering a depression. For some areas of the economy,...

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Yellow Flag Jobs Data

As I file this letter Friday morning, people are reacting to the July jobs report. My own reaction: The headline report is absurd. I will explain further at the end of this letter. But first, I have another topic. Regular readers know I worry about debt, mainly that...

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2020 Crash #2 Inevitable, so says new Algo

The US stock market will soon experience its second crash for 2020.  My continuing empirical research of market crashes resulted in two new metrics being discovered.  The combined two indicate that another violent market crash for 2020 is inevitable. These metrics...

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European Resurgence

One of COVID-19’s many less-than-obvious consequences is the way it makes us look inward. Facing mortality has always done that, of course. West Texas Judge Roy Bean reportedly said, “Nothing focuses the mind like a good hanging.” For the vulnerable and those of us of...

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Avoiding a Second Wave

  John P. Hussman, Ph.D. President, Hussman Investment Trust August 2020 Owing to the lack of effective therapeutics or vaccines, the best measures to control human coronaviruses remain a strong public health surveillance system coupled with rapid diagnostic...

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Is stagflation upon us?

On Tuesday/Wednesday the Fed will hold its July Open Market Committee meetings. The policy-setting gathering is certain to keep its main rate unchanged and push for continued easy money. Fed Chairman Powell is sure to reiterate his concerns about the poor outlook for...

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Two Compelling reasons for rally from 2020 low

As the Coronavirus continues to plague the world it seems like it has been a very long 4 months from when we hit the depths of the bear market.  On March 23rd we alerted our investors and readers that the Stock Market was reaching a bottom despite the panic many...

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Valuation Inflation

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”             —Benjamin Graham You may have noticed a bit of manic activity in the stock market. You may have also noticed inflation (as measured by various government...

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Small Business Blues

Politicians love saying small businesses are important to the economy. In this case, it isn’t just rhetoric. The millions of little companies with a handful of workers are, collectively, more important than the few hundred large enterprises we see in the news. That’s...

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Fundamentally Unsound

  John P. Hussman, Ph.D. President, Hussman Investment Trust July 2020 Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence, all upper limits disappeared, not only upon the...

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Stumble-Through Jobs Market

Work has always been a fact of life. Paycheck-producing jobs are actually a recent development. Until the Industrial Revolution, most people lived on subsistence agriculture, sustaining themselves with whatever they could produce or working as slaves/serfs. The...

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The Blacker Swan

“A similar effect is taking place in economic life. I spoke about globalization in Chapter 3; it is here, but it is not all for the good: it creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words, it creates...

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Bear Trader Pro to increase subscriber profits

Bear Trader Pro, a professional version of Bear Trader will soon be available.  The Bear Trader will also continue to be available for subscription.  A professional version was needed since Bear Trader’s text messaged instructions for @market orders are sent before...

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RIAPro: 15-Investing Rules To Win The Long-Game

I wanted to share with you a post I wrote for our RIAPro subscribers (try risk-free for 30-days) on the 15-investing rules to win the long-game. The rather “Pavlovian” response to Central Bank interventions has led investors into a false sense of security with respect...

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Bear Trader Friday June 26th alert explained

You are receiving this message since the alert which was sent to Bear Trader subscribers and former Bull & Bear Tracker subscribers on Friday June 26th was out of the ordinary.      On Wednesday June 24, 2020, Bear Trader sent its first green alert to buy a long...

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Market Corrects As COVID Cases Surge 06-26-20

In this issue of “Market Corrects As COVID Cases Surge.” Market Holds Bullish Support From Bubble, To Bust, To Bubble The Problem With 2-Year Forecasts A Bearish Pattern Remains Portfolio Positioning MacroView: Rationalizing High Valuations Won’t...

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A Recession Like No Other

We just spent the better part of a decade wondering when the next recession would strike. The last two months we stopped wondering. It’s here and a grand council of esteemed economists has confirmed it. On June 8, the Business Cycle Dating Committee of the National...

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Where We Go from Here

Predictions are difficult, especially those about the future. That old proverb (often attributed to Yogi Berra) is right but you can’t live without making certain presumptions. You presume your car will start, your refrigerator will stay cold, the lights will turn on...

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Market Corrects As COVID-19 Cases Surge 06-12-20

In this issue of “Market Corrects As COVID-19 Cases Surge:” Market Correction Short-Term Excesses Reversed A Note Of Fed Forecasts The Bear Case Is Still Valid Technical Review Remains Bullish Portfolio Positioning MacroView: Rationalizing High Valuations...

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The Stumble-Through Economy

We are on the horns of a dilemma, caught between the Scylla and Charybdis, a rock and a hard place, the devil and the deep blue sea, the anvil and the hammer. The walls are closing in. We’re in a tight spot. All those metaphors (I could list more but will spare you)...

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Volatile market decline to soon begin

The reopening of the world economies last week and the headlines about every economist on the planet being wrong about Friday’s US jobs report resulted in a stock market buying stampede.   Based on the total job gains representing only 21% of the US jobs lost since...

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COVID-19: A Data-Driven Analysis

Should you wear a mask in public? This seemingly simple question immediately generates emotional, political, and social anxiety. It is just one of many provocative questions COVID-19 is forcing upon us. They should be simple, data-driven policy issues but many are...

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Are Investors Too Optimistic About A Recovery?

People tend to overlook the long-term damage being done to the economy. They think we will just have a "V" shaped recovery or a "U" shaped recovery, and things will be fine. I'm sorry, that is just not how it works. Recessions create output gaps, and those output gaps...

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Economics in Orbit

The history of humanity, at least as taught in most schools, is really about two seemingly opposite forces: human innovation and human conflict. The same intelligence that lets us accomplish great things also sets us against each other. But sometimes, we rise above...

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Bear Market? Or Just A Big Correction? 05-22-20

In this issue of “Was This A Bear Market? Or Just A Big Correction?” Still Stuck In The Middle What Defines A “Real” Bear Market? A Growing List Of Concerns Portfolio Positioning MacroView: Why Jeremy Siegel Is Wrong About Bonds Sector &...

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Rewinding the Tape

We finished the Virtual Strategic Investment Conference yesterday. I can honestly say it was simply the best conference I have ever attended or been privileged to host. The ability to bring together so many exciting speakers, something schedules would not have allowed...

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Reflection Week

I knew this letter’s topic months ago. It was going to be a review of the Strategic Investment Conference, which would have just concluded fabulously in sunny Scottsdale. Well, something intervened. Coronavirus precautions kept us from having an in-person conference....

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Fed can’t Fool Mother Nature!

The S&P 500’s rally from its March 2020 low to within 13.2% of its 2020 high has been primarily fueled by the US Federal Reserve’s monetary stimulus.  The Fed has and continues to spend trillions to provide the economy with liquidity and to artificially prop up...

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Why Assets Will Crash

The increasing concentration of the ownership of wealth/assets in the top 10% has an under-appreciated consequence: when only the top 10% can afford to buy assets, that unleashes an almost karmic payback for the narrowing of ownership, a.k.a. soaring wealth and income...

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Five Viral Lessons

We live in truly historic times. “There are decades when nothing happens, and weeks when decades happen,” says a quote usually attributed to Vladimir Lenin. It certainly fits now. For thousands of years, people who lived through what we call “history” didn’t realize...

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Market to Turn its Attention back to the Economy

On March 23rd in the darkest moments of the pandemic, I wrote an article called ‘light at the end of the corona virus tunnel’ in which I strongly believed that the market, after a bruising 34% decline in only a matter of weeks, had reached a bottom and it was time to...

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Prepare for the Era of Recrimination

To think that the economy is going to reaccelerate in the third quarter in a V-shaped recovery to the level where gross domestic product (GDP) was prior to the pandemic is unrealistic. Four years from now the economy will most likely recover to the same level of...

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Statements made by Michael Markowski and Profitfromthecrash.com  pertaining to returns made from investing in Airbnb, UBER and Snapchat are not indicative of a TRACK RECORD. They are examples for educational purposes only.