Hussman Breaks It Down For Everyone

Tried to post this earlier today, but server was down.

I thought this quote from John Hussman at www.hussmanfunds.com was fitting for today:

"I don't talk like this often. In fact, I've been frustrated to watch various investors speculating in short sales and put options and the like over the past couple of years, when valuations have been unfavorable but market action has still been favorable in my opinion. Historically speaking, conditions that would warrant even being neutral toward the market only happen about one-quarter of the time (though more often in recent years because of rich valuations). Conditions that would warrant using short sales and put options in a speculative way (not just to hedge existing market risk) occur even less, and require at least the combination of both unfavorable valuations and unfavorable market action. There have literally been only a few weeks since March 2003 when put options and short sales have been reasonable speculations (again, hedging aside). It's been painful to see certain investors burning through their capital in the attempt to gain from the short side of the market over the past couple of years while the Market Climate has been constructive (if you think I'm referring to you, then yes, I might be referring to you)."

Regards,

BG