The Hussman's Strategic Allocation Metric.By stockmarket analyst and hedge fund owner JohnP Hussman.
Hussman’s chart is called the Strategic Allocation metric.
Hussman uses a 12-year horizon.
When the actual 12-year total return of the S&P 500 ‘overshoots’ — as shown by the arrows on his chart — it indicates the highs, prior to the subsequent turns.
For those wanting additional information, this paper goes into great detail on how it is calculated.
For this current fall, Hussman’s foresees a 50–60% fall in the S&P 500, bottoming at the start of 2022.
The US Mean Investor Equity Allocation ChartTake the year 2000. The righthand side indicates 19% total return growth.
If you had purchased 10 years earlier in 1990 and held for the 10-yearperiod until 2000 (just before the dotcom crash), you would have gained a huge19% total return per year, on average.
If you had bought in 2000, however, and held for an entire 10-year periodthrough to 2010, you would’ve ‘gained’ 0% per annum, on average.
Pick a date and it will indicate the approximateannual return you would receive if you held for the entire 10-year period.
The percentages in the right-hand axes indicate the return for that period.
If the return is 0% within the 10-year period, it means there was a majorpanic, and profits were wiped out.
If you had purchased10 years earlier in 1990 and held for the 10-year period until 2000 (justbefore the dotcom crash), you would have gained a huge 19% total return peryear, on average
