(Excerpt from this week's commentary) "The discussion here will not help to understand my “miss” in 2009-early 2010, which was related to the need to stress-test our approach to ensure that it was robust even to the worst portions of Depression-era data. It’s incorrect to view that “miss” as a result of our indicators, strategies, or valuation methods; it resulted from the similarity between Depression-era events and what the U.S. economy was actually experiencing in real-time, and my insistence on having the a robust method to navigate that uncertainty (despite our existing methods doing just fine to that point). Both trend-following methods and typical valuation thresholds were torn to pieces during the Depression, far more violently than investors may appreciate. Like me or hate me for that decision, but I wouldn’t fly a plane that I wasn’t certain could handle extreme turbulence – and I expect there will be more of that turbulence over the coming decade than investors seem to envision here." (End of excerpt) -----
Let me say: I enjoy Dr. Hussman's commentaries and did own his HSGFX for a number of years. I think the underlying message in all this might well be that it is incredibly difficult to anticipate or predict market movements over short or even intermediate time-frames. He has tried - and tried nobly. I'll give him credit for that and wish his investors well. With each passing day, with markets at record highs, Hussman's usually guarded outlook comes closer to being correct. Just posted this for those who might find it of interest & will have no further comment. Regards
Link to full Hussman Weekly Commentary for May 6, 2013
http://www.hussmanfunds.com/wmc/wmc130506.htm
Comments
In other words, his approach resulted in no profit, at least for the time period in question.
Not being able to call every wiggle in the market over the ST or intermediate term is one thing but this level of underperformance over a five-year period is inexcusable. Dr. Hussman will once again be correct sometime in the future and the S&P 500 index will lose somewhere between 33% to 55% in a bear market but this will not be a validation of Dr. Hussman's analysis of market valuation, etc. Rather, it will be a case of the broken clock being correct one of the two times it is destined to be correct.
If you are risk averse or bearish there are many mutual funds that can be your ally, preserve your capital in adverse market conditions, yet still grow your money over the very long term , e.g., OAKBX, FPACX,BERIX, etc. The extreme underperformance and 22% loss over the past five years makes HSGFX uninvestable, IMHO, regardless of Dr. Hussman's genius and understanding of economic fundamentals.
No, I am not suggesting that the manager should be forgiven for being so wrong for such a long time, but one cannot deny the fact that during the first few years of its existence his fund was making lots of money whereas S&P 500 was loosing lots of money.
Like Dlph said, there are many other capital preservation managers worth investing in other than this one.
I know people are going to get all upset over the expense ratio, but I think SIRIX is a better alternative for those looking for a very low-key absolute return fund (and at least SIRIX has been providing a decent yield.)
When both are working against you, no point swimming against the tide.
That's how I bought FAIRX. That's why I bought some Hussman a few days back. Watch the chart of your ENTIRE portfolio.
I can understand Hussman has gone DOWN for long time. Fact it I haven't owned it for a long time. I'm okay with it.
As for Hussman, I think it's stunning that HSGFX still has over $2B in AUM. Other managers wish they could underperform like that and still have some money that patient left.
Investors are a funny bunch. See Hussman's returns in 2000-2002. It is not surprising he has $2B in assets. I believe that is substantially lower than the high in assets, but those who have held him for a decade are not likely to sell unless you see period like early/mid 90s AND Hussman stinks up the place. I was actually more surprised why people stuck around with Bill miller with so many billions in assets. One thing you cannot accuse Hussman is having market winds behind his back one way or other. On the other hand, I never had a doubt in my mind the legend of Bill Miller was utter nonsense. He to me never seemed capable to rebounding like Berkowitz has and even Heebner I feel can.
I announced on the board when I bought Hussman the first time, just like when I bought FAIRX (while everyone was down on it). Full disclosure, I own positions in HSGFX, HSTRX, HSIEX and consider it a "single" position. I expected to own a lot more, until he threw me a curve ball with HSDVX. Kinda seemed like an asset gathering gimmick and I am a little wary of such things.
So I certainly feel more sanguine about someone such as Steve Romick than Hussman and I'm watching carefully. However I'm playing while watching. If FPACX performance over last 3 years had matched Hussman's, I'm not sure how many of us would have voiced similar concerns. I'm thinking not. Why? Because as long as the "argument" made by the manager makes sense, enough people stick around. Personally I feel Berkowitz is way more dogmatic than Hussman.
Frankly, I think a MFO call with Hussman might be a good idea (hint, hint, hint).