Sunday, May 6, 2012

Latest Hussman

Tonight's column:

"[T]he monthly rolling beta of mutual funds (their sensitivity to market fluctuations) now exceeds 1.10 and is the highest since the previous record, just before the wicked market plunge in 2011. Meanwhile, examining the sectors in which institutions hold their largest 'overweight' relative to the S&P 500, institutions are more concentrated in high-beta sectors than at any time since the start of Morgan Stanley's data, and long-short funds are also near their most leveraged long positions in history. Of course, mutual fund cash levels also remain at record low levels."
Also:
"Failing to adjust for the cyclicality of profit margins isn't just a transitory issue of 'oh, well then we might have next year's earnings estimates a bit high.' No, failing to adjust for the cyclicality of profit margins means that the entire estimate of fair value is off by something on the order of 50-70% from where it would be on the basis of normalized margins (somewhere in the range of 850-950 on the S&P 500)."
Hussman is on fire recently. I can't believe his long term track record isn't better.

1 comment:

wildcat said...

how much of the first point is due solely to AAPL?