John P. Hussman, Ph.D.

You'll also notice that the valuation metric in the previous post peaks at market *bottoms*

Because margins do fluctuate.

That's why, in market cycles across history, valuations anchored to revenues and gross value-added are better correlated with long-term returns than even P/E ratios.

You know it's a bubble when this is their math.

Look. Valuations map to deliverable cash flows.

Price/Revenue?
Yes, particularly if margins fluctuate.

(Price/Revenue)/Margin = Price/(Revenue x Margin) = P/E
Ok, if margins are permanent.

(P/E)/Margin? That's Price/(Revenue x Margin^2)

‘The US stock market is basically as expensive as it has ever been.’ www.man.com/insights/roa...

Even in a bubble, nothing remains in our discipline that relies on a market collapse - I do expect that over the full-cycle, but it's enough merely for the market to fluctuate.

Short-term diagonals at the steepest valuations in history are less fun, but often resolve abruptly.

Meanwhile ...

Not our methodology, and nothing in our discipline relies on a collapse, but it's interesting that 30-day dispersion lines up with this ramp toward singularity.

"It’s not just the unusually sharp rise in dispersion that is worrisome right now; it’s also the fact that that dispersion is being driven by the stocks most sensitive to a turn in the broader credit cycle."

- Jesse Felder @jessefelder.bsky.social, The Felder Report

YouTube video by Eric Carmen - Topic She Did It (Remastered)

Soundtrack for Sep comment: She Did It - Eric Carmen, 1977

Session roster is crazy!
Backup: Beach Boys Bruce Johnston & Brian Wilson
Burton Cummings - Guess Who
Nigel Olsson - Elton's drummer
Drums: Jeff Porcaro - Toto
Guitar: Andrew Gold (Lonely Boy)
www.youtube.com/watch?v=Cjxp...

That said, on the subject of seeing valuations at the most extreme point in history, yet seeing it not matter - we don't need to rely on a collapse to allow for the possibility. Here's what I wrote in March 2000 just before the NDX dropped by, well, 83%.

The return from today to tomorrow is proportional to the crash hazard rate. In essence, investors must be compensated to hold an asset that might crash - implying an underlying risk, not yet revealed in the price dynamics, which justifies this apparent free ride and free lunch.

– Didier Sornette

Excellent summation of AI usage:

"... the less you’re willing to think, the more vulnerable you are to having AI think for you, and the more you’re willing to think, the greater the opportunity you have for AI to leverage your insight....Our most urgent focus should be on that choice."

The hedge is the margin of safety. You may not know my 40 year record on that, but then, it admittedly was hidden under a bushel in this bubble

gotta love a regularity, particularly when you don't rely on it

depends on stock selection

’The singularity is not the date of a “crash.” Rather, it’s the point where the pitch of the advance reaches its extreme.‘ www.hussmanfunds.com/comment/mc25... by @hussmanjp.bsky.social

Surreal 😉

Billboard Hot 100™ THE WEEK’S MOST POPULAR CURRENT SONGS ACROSS ALL GENRES, RANKED BY STREAMING ACTIVITY FROM DIGITAL MUSIC SOURCES TRACKED BY LUMINATE, RADIO AIRPLAY AUDIENCE IMPRESSIONS AS MEASURED BY LUMINATE AND SAL...

Bonus! Billboard Hot 100 from October 1977. Crazy how many classics these 70’s charts have week after week.
www.billboard.com/charts/hot-1...

Singularity and the Buzzard - Hussman Funds Division by zero is known as a 'singularity.' It’s the point where equations break down, values become 'indeterminate,' things stop working normally, and variables shoot toward infinity and suddenly c...

A new market comment from @hussmanjp.bsky.social just dropped and it dispels a lot of myths. 👇🏼

www.hussmanfunds.com/comment/mc25...

Singularity and the Buzzard - Hussman Funds Division by zero is known as a 'singularity.' It’s the point where equations break down, values become 'indeterminate,' things stop working normally, and variables shoot toward infinity and suddenly c...

New comment is up! 🐳
www.hussmanfunds.com/comment/mc25...

“what does not kill me makes me stronger“ - SARS-Cov2, as quoted by Nietzsche

“I won’t be ignored“ - SARS-Cov2, as played by Glenn Close

thankfully just infectivity

😉

… meanwhile on the artist formerly known as Twitter

‘The Shiller cyclically adjusted price-to-earnings ratio is hovering around 37.5. Over 35 is ”the only cutoff point where every single time is negative.”‘ www.businessinsider.com/stock-market...

This is, because that is
This is not, because that is not.
They are like this, because we are like that
They are not like this, because we are not like that.
- Buddha

We are all made of one same substance; a shared humanity. The only enemy is our forgetfulness of that reality.

Learning the Quadratic Equation Doodle - Google Doodles Learn more about the creation of Learning the Quadratic Equation Doodle and discover the story behind the unique artwork.

Great Doodle today if you're a math geek 🤓
doodles.google/doodle/learn...

"it's funny 'cause it's true" - Homer Simpson

Maternal Acetaminophen Use and Offspring's Neurodevelopmental Outcome: A Nationwide Birth Cohort Study Background Maternal acetaminophen use during pregnancy is common globally. However, its potential risks for neurodevelopmental disorders in offspring, including attention-deficit hyperactivity disor...

2/ 2025 large-scale (Japan)

Composite neurodevelopmental outcomes: 1.08 (95% CI: 1.00, 1.16). Confidence interval includes 1.0 (no effect)

ADHD: 1.22 (95% CI: 1.09, 1.36): Known, mild risk for hyperactivity

Autism (ASD): 1.06 (95% CI: 0.98, 1.15) for ASD

onlinelibrary.wiley.com/doi/10.1111/...

Acetaminophen Use During Pregnancy and Children’s Risk of Autism, ADHD, and Intellectual Disability This nationwide cohort study with sibling control analysis examines the association of acetaminophen use during pregnancy with children’s risk of autism, ADHD, and intellectual disability.

1/ JAMA (2024): Acetaminophen use during pregnancy was not associated with children's risk of autism, ADHD, or intellectual disability in sibling control analysis.

Cites confounding in prior studies. Own view: mild bump in risk for ADHD, but dose/duration dependent.
jamanetwork.com/journals/jam...

As @peteratwater.bsky.social would say, "there's a sentiment indicator in here somewhere."

Fun fact: the S&P 500 also averaged total returns of about 20% annually over the 18-year period to the 2000 bubble peak (see my August comment for more).

Love that the author's last name is Karma.