- Stocks are almost back at a new record high, and investors may think they dodged a bullet following the late-December market meltdown.
- John Hussman — the outspoken investor and former professor who’s been predicting a stock collapse — says overconfident traders are being lulled into a false sense of confidence.
- He explains why he sees the benchmark S&P 500 tumbling 30% by the end of 2019 before trading completely sideways for the next decade or so.
- Visit BusinessInsider.com for more stories.
With the S&P 500 back within 1% of an all-time high, you may be thinking stocks are headed for another lengthy period of strong gains.
After all, the ongoing 10-year equity expansion stared a bear market in the face on Dec. 24 and rebounded with aplomb. What doesn’t kill you makes you stronger, right?
Wrong, says John Hussman, the former economics professor who is now president of the Hussman Investment Trust.
For months, even years, he’s been telling anyone that will listen that stocks are just as overvalued now as they were ahead of the 1929 and 2000 market crashes. And he views the post-December rebound as the latest in a long series of bullish head fakes built on irrationally exuberant sentiment.
Hussman says it’s that overconfidence that will ultimately be the market’s demise. In his mind, the recovery since the Dec. 24 bottom is exactly the type of development that makes investors put their blinders up.
“Full-cycle risks have a way of emerging in ways that investors wholly rule out at market peaks,” he wrote in a recent blog post. “Glorious half-cycle market advances leave investors vulnerable to catastrophe, because investors hold contempt for anyone who suggests there may be a cliff on the other side of the mountain.”….more here