Hussman Annual Letter

Dr. Hussman of the Hussman funds came out with his annual letter over the weekend. Can be found here. He runs several mutual funds so most of the 52 pages is financials and other information required for regulatory purposes. The first few pages however has some of Dr. Hussman's thoughts which are always worth considering.

Starts with:

I continue to be concerned about credit conditions and the underlying fundamentals of the U.S. economy. In recent months, fresh deterioration in leading economic measures, narrowing compensation for credit risk, and rich stock market valuations have increased the vulnerability of equities and corporate bonds to price weakness. These concerns are reflected in the restrained exposure to risk that the Hussman Funds presently accept.

I continue to be concerned about credit conditions and the underlying fundamentals of the U.S. economy. In recent months, fresh deterioration in leading economic measures, narrowing compensation for credit risk, and rich stock market valuations have increased the vulnerability of equities and corporate bonds to price weakness. These concerns are reflected in the restrained exposure to risk that the Hussman Funds presently accept.

Really incredible the level of silliness that was reached in less than a year from the massive move down in the markets. And this is just amazing even if you previously knew it:

Given that GDP growth over the past year has amounted to $563 billion, while Federal government debt has increased by $1.6 trillion, there appears to be little evidence that the positive economic growth of recent quarters was driven by much else but the deficit spending of government and to a lesser extent, the aggressive purchase of mortgage securities by the Federal Reserve.

Talk about low return on your money.

There is much more related to valuation of the equity markets and additional thoughts on the current economic situation.