Hi Guys,
Given his painful results over the past few years, John Hussman is an easy target to condemn. Indeed his investment outlook and outcomes have been errant and dismal, respectively. He now looks like the Wall Street gunner who can’t shoot straight. Just another financial hero who falls from grace.
I have never invested a dime with him, but I do enjoy his reports on occasion. As a minimum, he always develops a respectable argument to support his conclusions and recommendations. Unfortunately, predicting the future is hazardous business, and has been most costly for his clients.
Hussman is further evidence that forecasters can not really forecast. Phil Tetlock has studied thousands of so-called expert forecasters and has firmly established their record as no better than a fair coin toss. Here is a Link to a rather long discussion with Tetlock that explores how to improve any forecasting talents:
http://edge.org/conversation/how-to-win-at-forecastingHussman is far too nuanced for my investment tastes. I prefer much more simplified approaches, much like in the practices of the Warren Buffett and Charlie Munger team. Here are a few Buffett quotes that seem to conflict with the way John Hussman conducts his business:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the
160 IQ beats the guy with
130 IQ.” I suspect Buffett failed to recognize that a guy with a
130 IQ is pretty smart. That’s 2 standard deviations above the average person.
“If you don’t feel comfortable owning something for
10 years, then don’t own it for
10 minutes.” Long term holding periods is a key to successful investing as illustrated by the Fidelity references cited in the earlier commentary.
“The Stock Market is designed to transfer money from the Active to the Patient.” Frequent trading is erosive to end wealth has been demonstrated time and time again.
“I don’t look to jump over 7-foot bars: I look around for
1-foot bars that I can step over.” Hussman’s style seems to be the 7-foot barrier with great rewards when successfully cleared, but many pratfalls more often than not.
And finally, “By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.” Even the know something investor can profit from this bit of wisdom.
Buffett has penned scores of other applicable quotes that caution against the policies, the procedures, and the practices deployed by John Hussman. I prefer the Occam’s Razor general strategy (take the route with the fewest simple assumptions) endorsed by Buffett and Munger.
Have a terrific Holiday season, and Best Wishes.
