This week's was an especially good read. He spelled out a little market history comparing the current state of the market to past, similar periods.
December 1961 (followed by 28% market loss over 6 months)
January 1973 (followed by a 48% collapse over the following 20 months)
August 1987 (followed by a 34% plunge over the following 3 months)
July 1998 (followed abruptly by an 18% loss over the following 3 months)
July 1999 (followed by a 12% loss over the following 3 months)
December 1999 (followed by a 9% loss over the following 2 months)
March 2000 (followed by a 49% collapse in the S&P over the following 30 months)According to Hussman those periods all share the following with today;
1) price/peak-earnings multiple above 18
2) 4-year high in the S&P 500 index (on a weekly closing basis)
3) S&P 500 8% or more above its 52-week moving average (exponential)
4) rising Treasury and corporate bond yields
Hussman is quick to point out that he is not trying to make a prediction so much as create context for current market events.
This is an important distinction. The market can go any direction at any time for any reason or no reason. The general tone of Hussman's article ties in with what he has been writing for a while but the bullet points sum it up nicely.
Clearly these sorts of obstacles can exist for a long, long time without hurting the market. This is an argument for not making big bets to get out of the market for fear of a correction, bear market, crash or whatever else. I continue to be bearish (have been for a while and have been incorrect) but am so without missing the market. My trigger point for taking action is simple (a breach of the 200 DMA by the S&P 500) and has not been violated so I ride along skeptically thinking a turn will come soon.
Bear markets come so infrequently that guessing on the next one in a meaningful way is like to be the wrong trade. Hussman creates a great background of what stocks must continue to overcome go higher. The things Hussman cites or maybe subprime or maybe the dollar or something else will cause the next bear market at some point but time devoted to trying to nail the top is probably not productive.