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Value Guru Sees 10 Percent Returns Ahead

By    |   Monday, 23 Mar 2009 10:16 AM

Value investor John Hussman believes that current stock valuations are blatantly attractive for the first time in five years.

"I do believe that the stock market remains undervalued," Hussman recently noted, The Money Times reports.

"Passive, long-term investors are likely to achieve reasonably good market returns in the area of 10 percent annual total returns over the next seven to 10 years."

In other words, Hussman foresees 10 percent returns for simply sticking your cash in an index fund that tracks the S&P.

Hussman has more than doubled the value of his Strategic Growth Fund, largely by avoiding market exposure during recent months. His fund has achieved cumulative growth of 106 percent since its inception.

“Investors may demand much higher prospective long-term returns in order to accept risk, and that's a problem, because the only way to price stocks to deliver higher long-term returns is to drive prices lower,” Hussman said in a recent note to clients.

“My impression is that only prices that allow no room for error will be sufficient to prompt robust, committed buying from value investors,” Hussman says.

Despite mostly higher stock prices this past week, investor fear indices moved higher, Forbes reports, with gains of just half the declines seen in the prior week.

The CBOE Market Volatility Index (VIX) added 8.33 percent to 45.89, and the Nasdaq Volatility Index was up 8.27 percent to 44.66.

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Value investor John Hussman believes that current stock valuations are blatantly attractive for the first time in five years."I do believe that the stock market remains undervalued," Hussman recently noted, The Money Times reports."Passive, long-term investors are likely to...
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2009-16-23
Monday, 23 Mar 2009 10:16 AM
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