The market's most outspoken bear sees recent turbulence fueling his forecast of a 60% stock drop — and says it's too late to get out

Business Insider | 4/10/2018 | Joe Ciolli
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John Hussman, the outspoken investor and former professor who has been predicting a stock market crash, has recalibrated how he looks at his forecast.

Recent market volatility resulting from rising trade-war fears has poured fuel on the fire for his latest bearish proclamation.

Hussman - Stocks - % - Issues - Warning

Hussman not only sees stocks plummeting more than 60%, but he also issues the stark warning that there's very little investors can do to avoid major pain.

John Hussman knows that when he makes his extremely bearish stock market forecasts, some people may roll their eyes.

Economics - Professor - President - Hussman - Investment

After all, the former economics professor who is now president of the Hussman Investment Trust has made a name for himself by repeatedly predicting a stock market decline exceeding 60% and forecasting a full decade of negative equity returns— and yet here we sit just 9% from record highs, even after some bouts of heavy selling.

At this point, Hussman is in on the joke. On his Twitter biography, he refers to himself as a "realistic optimist often viewed as a prophet of doom." It's a tongue-in-cheek reference to his forecasts, which many view as outlandish but which he sees as a logical endpoint for markets.

Hussman - Self-awareness - Lack - Conviction - Equity

But don't confuse Hussman's self-awareness with a lack of conviction. He's still dead set on sweeping equity declines totaling more than 60% — a plunge he says will erase the excess total return of the S&P 500 index dating all the way back to October 1997.

That's because rather than losing faith in his call, Hussman did some digging around as to why it hadn't yet come true, and has recalibrated the conditions of his forecast. He now says two things have to happen: (1) valuations get historically extended, and (2) investor sentiment shifts into risk-off territory.

Market - Collapses - History - Feature - Investment

"When we examine market collapses across history, the common feature is that both investment merit and...
(Excerpt) Read more at: Business Insider
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