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They've Ruled Out Tail Risk - Hussman Funds

hussmanfunds.com · 4,019 words · saved by 1 readers

Whether we examine the projections of Wall Street analysts, or the pricing behavior of options traders, investors seem to have ruled out tail-risk - the risk of extreme market losses. Both of have historically behaved as contrary indicators.

John P. Hussman, Ph.D. President, Hussman Investment Trust December 2022 As of Friday, December 16, the S&P 500 Index is down -19.7% from the most speculative level of valuations in U.S. history – exceeding even the 1929 and 2000 extremes, based on the valuation measures we find best-correlated with actual subsequent market returns in cycles across history. The apparent shallowness of this loss isn’t a sign of “resilience.” Despite being nearly a year into what we expect to be a far deeper retreat, the relatively shallow loss isn’t even surprising. The same thing happened in the first year of

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