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Hussman Funds...4/18/2011 Weekly Market Comment (you favorite relaxant required)

edited April 2011 in Fund Discussions
This may require a couple of glasses of your favorite relaxant to understand...I'm up for the challenge.

First sip:

"Market conditions in stocks continue to be characterized by a hostile syndrome of overvaluation, overbought conditions, overbullish sentiment, and rising interest rates, which has historically been associated with a poor return/risk profile, on average, across a wide variety of subsets of historical data."


  • Thanks for the sip. I can extrapolate the rest based on what I've read from his earlier commentary.;)
  • edited April 2011
    HSGFX is -1% for the last 5 years, -3% for 3 years. It's down 10.2% from it's most recent high. This is while the market has made tons of money since 2009. It's hard for me to believe anyone is still reading Hussman's weekly updates. I admire people holding on to their convictions, but that doesn't work very well for a mutual fund manager. Seems he should have adapted to reality a whole lot sooner instead of claiming he is right and every other investment manager is wrong. Owning his fund was very frustrating. I gave up on it at the start of 2010 and added that money to Permanent Portfolio. So glad I did.

    What I learned from Hussman is, if you are looking for a conservative fund with a goal of staying ahead of inflation - there are better funds than Hussman's Strategic Growth fund.
  • Translating into standard English, I think he said "This market sucks." Hell, we all can see that... why's he think he's so smart?
  • Hussman hit it out of the park in '01, '02 and '03. Since then he's been bunting to get on base and rarely succeeding. In 2004, I thought JH had some special market insight and allocated about 12% to HSGFX. After his huge success 2001-03, he seemed reluctant to stake out a position vis-a-vis the market, and instead ran a tightly collared closet index, very similar in my mind to Gateway (GATEX). No added value there. I exited HSGFX in 2007.
  • While I don't hold any of his funds, I find it amazing that so many people think he runs only one fund, Hsgfx. Hstrx (Huss Strategic Total Return) is his hybrid bond fund, a more direct competitor to funds like Prpfx, and a far better fund overall. (He also has a new foreign fund.)

    Like with Hsgfx, however, he's pretty much a hands-off manager who rarely uses the latitude the Hstrx prospectus gives him. I'd love to own a fund with an experienced manager who uses all the tools Hstrx's prospectus allows - too bad it'll never happen with JH.
  • I own the Total Return fund and pretty much see it as a short duration bond fund. I think the bond holdings are now down to an average 1.5 year duration now. Like you said, Hussman is very conservative and does not use the latitude the prospectus says he has. If he takes a position in gold, it may only be a percent or 2. But because I use HSTRX as a very conservative (and pretty small) position in my portfolio, the fund fits a need.

    Actually, there are many funds with experienced managers that have similar options to HSTRX. They are called allocation funds and they typically don't fall under the conservative heading. Becuase they do use the latitude and tools you suggest, they tend to be more volatile. I think of FPACX, FPA Crescent as having a great manager with many options. WASYX Ivy Asset Strategy is another I own. Pimco has a few funds with go-anywhere mandates.
  • this fund looks like a dead fish, the management team is laughin' their ways to the bank while the investors are paying for nearly marginal returns over the past 5-10 yrs...
  • Hi Mike, I was thinking of a fund that has substantially the same latitude as Hstrx and actually uses it - ~75% diversified U.S. bonds (not just T's as he actually does), ~25% foreign currencies & bonds & utilities/PM stocks (bumping up toward the maximum more often than not). I don't know of another fund that does that. Fpacx, Wasyx, Pauix, etc., are pretty different beasts.
  • Yikes, stopped reading Hussman's ^#@(& years ago, but confess to owning a bit of HSGFX. Don't ask why. Nobody said ya had to be sane to post here. Can only say that on days like Monday when everything else was down this fund was up. Them weekly writings of his have a repetitiveness to them and mostly portray JH as a victim. Blame it on the Fed or the pols or the irrational markets or the moon I guess. Never his fault the fund can't get out of its own way.
  • edited April 2011
    The issue with Hussman is the academic nature of his outlook and investment process. If you look at all of his countless factoids and whatnot that he provides on a weekly basis, he's not necessarily wrong on various points in theory. He's simply never taken into account one thing during this period: ridiculously easy monetary policy (which I don't think is changing anytime soon, despite various plans that discuss how we can have austerity by 2070 or something ridiculous), and the fact that that money is going to look for a home in various risk assets, whether it makes strong sense or not (an overbought market can stay as such for ages, etc.)
  • Hi Scott. I was a bit over the top in criticizing the doctor (seriously). If he can make me some money while maintaining reduced risk profile I don't care what he writes or how he dresses. Can wear clown getup if he wants. Have found that having a little of his fund tucked away allows me to take a little extra risk in other areas, so dont feel I'm loosing much overall, could even be a slight plus. But Eee-Gads them weekly pieces can get to you. May be a public relations issue. To try to get a grip on this, I compared HSGFX to BEARX this morning and found the formers done much better. For ten years HSGFX has turned out 5.2% according to MS while BEARX is in the red. For shorter periods the contrast is just as dramatic. Also looked at T Rowe Prices highly touted Blue Chip fund over that period and it has underperformed HSGFX by about 2 percentage points. If ya think about that and care about your risk exposure, it aint bad. Some would say bonds have done better. But few knew that in advance and longer term bonds I think are a riskier proposition than JHs fund. Well, looks like another hot day in the markets shaping up. Take Care Scott.
  • edited April 2011
    Yeah, I'm not defending Hussman or anything, just trying to kind of psycho-analyze. It's clear that Hussman has done and continues to do extensive analysis and his weekly letters are technically well-written. It's simply that it's very much based in technicals and fundamentals, but he's really refused to buy into easy monetary policy and the effect that that's had - as a result, the last year or two has been disappointing. I would not expect more than singles from Hussman, but he's not even gotten that really in the last year or two.

    I suppose I can look at it as "old school" analysis of the market, which just isn't working in this market. It's sort of like if you continually tried to apply fundamental analysis during the .com boom in 1999 rather than going with it to a varying degree (for use of a better comparison.) It's not that specific points aren't right, but it's just the end result isn't matching. I sense from previous letters that he's trying to tweak things, but not really seeing that appear. I still respect Hussman's knowledge and experience, but I think there's a lack of flexibility to respond to a changing market. In terms of a very conservative fund,

    I think Hussman is still an okay choice, but I'm starting to wonder if there aren't better choices for those who are just looking for consistent singles year in/year out (such as Merger MERFX, and that's a fund where the only focus needs to be effectively taking advantage of Merger Arbitrage opportunities, not all manner of overall market analysis.) That's done better than Hussman over a 5-year period.
  • Thanks for the suggestion. I'll make it my next project to seek out possible alternatives. However, these types of funds that try to defy gravity and make money using equities and hedging in all market environments are notoriously erratic. A 5 year record wouldn't entice me unless the guy had a prior track record at a similar fund.
  • I have been in HSTRX (Strategic Total Return) for some time and have few complaints. A few years ago I made a parallel portfolio combining FSICX (Fidelity Strategic Income) and AOK (ETF of ETFs, mostly bonds w a touch of equity), maybe 35/65. Like it better. Thoughts?
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