Monday, June 12, 2006

Hussman Weekly Market Commentary: BEAR

Hussman has been spot-on in his analysis of the markets. Today he utters the B word... Bear.

Read the whole thing.

Hussman Funds - Weekly Market Comment: "As usual, our own investment approach doesn't focus much on identifying bull or bear markets (which can only be identified in hindsight), but instead focuses on prevailing, identifiable conditions of valuation and market action. For what it's worth, unfavorable Market Climates have a clear, but far from perfect overlap with periods that turn out to be "bear markets" in hindsight. Unfavorable Market Climates do tend to cover the worst portions of most bear markets, as well as periods within bull markets that were negated by abrupt weakness, which is important.

Given the present constellation of market and economic conditions, if I was to venture a guess, I'd guess that stocks have entered a bear market here. That opinion doesn't drive our actual investment stance, and we'll accept an exposure to market fluctuations on any significant improvement in valuations or market action, but I certainly would not rule out the potential for substantial further market weakness just because stocks are down a little bit from their highs. Nor, however, should we be surprised by a "fast, furious, prone-to-failure" rally to boost short-term hopes to the contrary. We're fully hedged regardless."

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