The Crash That Will Bring Down the Entire Galaxy
By Roger Nusbaum, AdvisorShares ETF Strategist
Ben Carlson had a little fun poking fun at the regular calls from Jimmy Rogers predicting the worst crash in our lifetime and other sensational headlines like the one for this post that is hopefully amusing. Ben found a headline like this attributable to Rogers going back every year to 2011. He says these extreme predictions offer no value.
John Hussman has an interesting approach to this sort of thing. While Hussman’s concerns have come nowhere close to manifesting in equity prices there is still value to be had. He frames it in terms of whether market conditions are relatively risky at the moment or not. An easy way to think about this is there is a lot less risk of a crash or bear market immediately after a crash or bear market. Markets are less likely to double after they have just doubled. Agree or disagree with Hussman, it is a simple way to view the world. Where I diverge with Hussman is concluding “oh, the market is overvalued and sentiment is too bullish so I must get out now” which is how I take Hussman’s approach and I think his fund’s results bear that out.
Over the course of an investing lifetime it is not crazy that you might get a market top or bottom exactly right and Rogers of course has made some great calls but Carlson’s point for the average investor (or advisor) not allowing being right on a couple of big calls to lead to over estimating the ability to make those calls (Dunning Kruger).
As someone who has read Hussman for ages, I am not sure what his discipline is for portfolio decisions. I think I have a sense of how he draws conclusions but process without discipline would seem to be a path to having a much harder time reaching whatever the objective might be. Guessing when the next crash will come makes for fun reading but the above link to Ben’s article shows how difficult it is and if it is that difficult then it is, as Ben says, useless.
A couple of weeks ago I wrote about my attempt to sell some of my photography at an art fair here in Prescott, AZ where I live. That post drew a lot of comments and interest which was very humbling. Over the weekend I tried again at Walker Day which is the big annual fund raiser for the fire department where I have been volunteering since 2003 (Chief since 2012). Before the first show, and as I mentioned in that other blog post, a friend who has quite a bit of experience said I shouldn’t expect to sell anything the first couple of times. I did a little better than nothing at the first show and a little better at the second show than at the first show although I don’t discount the possible help the firefighter out purchases.
I’m encouraged enough to keep moving forward but the art show route may not be ideal if as it appears, most of them cost several hundred dollars. Another friend is involved with gun shows and he said that tables at gun shows are often $75 with thousands of attendees versus maybe hundreds for art shows and that sort of audience is likely to have more interest in pictures of racing vehicles (NASCAR and desert racing), fire apparatus, motorcycles and old cars. I have some other ideas about how to sell some pictures including my national park pictures which may not be unique and my stadium pictures which I think might be unique. I want to reiterate that the expectation for monetizing a hobby should be that it will take a while, if it can even be monetized. For now, this is fun and all the better if it ever turns into a significant income stream. The above Harley picture was popular over the weekend.