Tags: Hussman Now Is the Worst Time Ever to Invest

John Hussman: This Is One of the Worst Times in History for Investors

Tuesday, 06 March 2012 07:26 AM

Economist and fund manager John Hussman says this is one of the worst times in history to invest.

“Last week, the estimated return/risk profile of the S&P 500 fell to the worst 2.5 percent of all observations in history on our measures,” Hussman writes in a note to investors. “This is not a runaway bull market. Rather, it is a market that again stands near the highs of an extended, but volatile, trading range,” he said.

“I am convinced that the breakdown of the market from this range has been deferred only through repeated and extraordinary central bank actions.”

Editor's Note: Wall Street Insider Exposes Death of Main Street America

Hussman says his greatest concern as an investment manager is the possibility that some shareholders will become exasperated with defensive measures and take a significant position in the market at the worst possible point.

"The completion of the present bull-bear market cycle (and it will be completed) will undoubtedly present strong opportunities to play offense, but today stands among a 'Who's Who' of the worst historical times to do so,” says Hussman.

“Particularly for investors who do not have a large number of future cycles between now and the point they will need to draw significantly on their assets, a defensive stance is crucial here.”

Others agree the U.S. economy still faces serious threats.

Yale University Professor Stephen Roach said the U.S. economy remains fragile because consumers are struggling with a heavy debt burden.

“It’s pretty fragile,” Roach said on CNBC television from New York. “Debt is high, savings are very low.”

Roach, Morgan Stanley’s former chairman for Asia and chief economist, said that a drop in U.S. jobless claims may be sending a “false signal” and won’t necessarily power economic growth.

The turn in the economy “has been glacial, the improvement minimal,” he said.

“It’s better than it has been but we’re very far away from a normal vigorous recovery,” he said.

Federal Reserve Chairman Ben Bernanke warned that the U.S. recovery could come off the rails in 2012 if Congress failed to take action to address a "massive fiscal cliff" of tax increases and spending cuts due to kick in early that year.

"I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date," Bernanke told the U.S.House of Representatives Financial Services Committee.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

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Tuesday, 06 March 2012 07:26 AM
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