"The more glorious this bubble becomes in hindsight, the more dismal future investment returns become in foresight," he penned in a recent client note. "At the market open of Friday, January 24, our estimate of likely 12-year nominal total returns for a conventional passive investment portfolio fell to just 0.04% annually, below even the previous record of 0.34% set in August 1929.
Hussman says no dice. To him, it all comes down to market internals — and right now, they're flashing red. He continued: "Presently, we observe the combination of hypervaluation and negative market internals, which I view as a 'trap door' situation." Hussman continued: "What concerns me is that many investors seem have drawn the 'lesson' that valuations don't matter, that the Fed is omnipotent, and that stocks are always an 'investment,' regardless of the price. That's a lesson that I suspect investors are going to re-learn the hard way over the completion of this cycle."
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Wow. This looks grim.