Market Watch: A 65% Market Plunge Would Be Run of the Mill, Fund Manager Says

Article by Shawn Langlois in Wall Street Journal Market Watch

While stocks staged a remarkable comeback from Monday’s deep decline, they still closed in the red. Three days later and sellers still have the upper.

John Hussman has to be savoring this kind of action. After all, when things turn south, Hussman’s fortunes turn north.

In fact, riding the cred he earned from calling prior market collapses, his assets under management swelled to almost $7 billion.

“One might view the very comparison of present stock market conditions to 1929 market peak as exaggerated and preposterous,” he wrote in his latest market commentary. “But then, one would be wrong.”

He explained that current market valuations “match or exceed” those during the 1929 peak, when an 89.2% drop awaited the Dow Jones Industrial Average over the next three years.

“Likewise, valuations for nearly every decile of stocks presently exceed those observed at the 2000 market peak,” Hussman wrote, adding that stocks are pricey enough at these levels to allow for market losses of up to 71% “without even breaching their respective valuation norms.”

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