Hussman Funds - Reprint PolicyWe welcome the use of brief quotations (one or two paragraphs) of the content published on the Hussman Funds site, provided such references include attribution and a direct link to www.hussmanfunds.com . snip: just a few paragraphs, of course .... As of last week, the Market Climate in stocks was characterized by unfavorable valuations and unfavorable market action, holding the Strategic Growth Fund to a fully hedged investment stance. The best way to open the potential to increased risk exposure and more constructive investment positions would be for the market to move a good distance below the recent trading range. As I noted last week, that would create what I think is the best we can hope for at present, which would be an advance back to this area. While current levels do not provide the expectation for strong long-term returns (our current 10-year total return projection still being in the 4-6% range), normalized valuations are not so high as to be unsustainable, so substantial moves below this range create some prospect for appropriate risk taking from an investment (not simply speculative) standpoint. In bonds, the Market Climate last week was characterized by unfavorable yield levels and relatively neutral yield pressures. Inflation pressures are likely to abate significantly in the months ahead, owing both to slowing global demand and to credit concerns (which lower monetary velocity – essentially increasing the demand for currency as a safe-haven, which slows its erosion of value). I continue to believe that the U.S. dollar is at substantial risk of a fresh depreciation. Though the economies of Europe and the rest of the world are slowing, the deterioration in the U.S. economy is also ongoing, and other countries have nowhere near the burden the U.S. does in terms of dependence on external capital. From my perspective, either U.S. domestic investment will weaken sufficiently that those capital needs will slow (which will tend to pressure the U.S. dollar via general economic weakness), or our continued reliance on external capital will pressure the dollar lower in order to create an incentive for foreign savings to finance us. unsnip.Ti (already got Hussman)
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