John Hussman is a stock market analyst who started up his own hedge fund called Hussman Strategic Advisors. Perhaps unsurprisingly, he is very bearish about the current state of the market. However, what is interesting is that Hussman has been so ever since the last recovery, which is much more unusual for a hedge fund analyst.
1. Studied At Northwestern University and Stanford University
Education-wise, Hussman studied at both Northwestern University and Stanford University. First, he earned a Bachelor of Science and then a Master of Education from Northwestern University, which was founded in the mid 19th century to serve what was still the Northwest Territory in those times. Second, he earned a Ph.D. from Stanford University, which is a school that should need no introduction.
2. Taught At the University of Michigan
Given that Hussman secured a Master of Education, it makes sense that he spent some time as a teacher. To be exact, he was a professor of economics as well as international finance at the University of Michigan in Ann Arbor, MI. Said school was founded in Detroit, MI. However, this changed when the state of Michigan made the choice to relocate its capital from Detroit, MI. Ann Arbor, MI was one of the cities that competed for the honor, with the result that it set aside 40 acres of land for said purpose. When the Michigan House of Representatives chose the Township of Lansing because of pure frustration, that land winded up being offered to the University of Michigan instead.
3. Went Into Finance Because of a Petty Argument
Hussman went into finance because of a petty argument. However, it wasn’t a petty argument that involved him. Instead, it was a petty argument that he happened to witness. In short, Paul Krugman was giving a presentation at Stanford University on economic development, which saw him drawing some small arrows on a diagram to show the movement of businesses from one area to another. Apparently, this irritated an economist theorist named Mordecai Kurz who didn’t draw arrows on a diagram without adding differential equations to explain what was happening, so much so that he started shouting at Krugman to do the same. When Krugman replied that he was just showing general movement, Kurz apparently screamed for him to erase his arrows before storming out and slamming shut the door. Suffice to say that Hussman was very unimpressed by what had happened, which prompted him to move into something with what he considered to be more meaningful stakes.
4. Anticipated the Dot-Com Bubble
One of Hussman’s most notable feats would be his successful anticipation of the dot-com bubble. For those who are unfamiliar, the dot-com bubble was a stock market bubble in the late 1990s and early 2000s caused by the popularization of the Internet plus a fall in interest rates and a fall in the top marginal capital gains tax in the United States. When the bubble burst in 2000, it took a number of communications companies as well as numerous online shopping companies with it.
5. Anticipated the Financial Crisis of 2007-2008
Speaking of which, Hussman also successfully anticipated the financial crisis of 2007-2008, which was a much more recent event. The whole thing started in the U.S. subprime mortgage market. However, it wasn’t too long before it had turned into a banking crisis of international scale. Massive state intervention prevented the worst case scenario of a complete collapse of the financial system, but the financial crisis nonetheless launched the Great Recession that continues to make its influence felt in the present time.
6. Has Been Bearish Since the Great Recession
Hussman has been bearish ever since the Great Recession because he thinks that quantitative easing has created a false recovery. In short, quantitative easing is when a central bank adds more money to the economy by buying government bonds as well as other financial assets. Generally speaking, it is used when the inflation rate has become either very low or even negative, which is a huge problem because that makes standard expansionary monetary policy ineffective. As such, quantitative easing is rather unorthodox even though it has been used by major central banks such as the Federal Reserve, the Bank of England, and the European Central Bank.
7. His Performance Has Suffered Because of This
It is interesting to note that Hussman’s persistence on being bearish has resulted in him being called a perma-bear by some. Moreover, his performance has suffered because of his perma-bearishness. Something that hasn’t been effective at changing Hussman’s mind on the matter.
8. Not a Market Timer
Market timing is an investment strategy that sees the investor buying and selling financial assets by making predictions about price movements in the market. It is possible for interested individuals to make successful predictions, but the important part is being able to make successful predictions in a consistent manner in the long run, which is much more challenging. Hussman doesn’t consider himself to be a market timer because he doesn’t consider its fundamental premise to be a good idea.
9. Has Established the Hussman Institute for Autism
Hussman has established the Hussman Institute for Autism, which seeks to help people with autism as well as their families. There are three components to its mission. One, it seeks to further understanding of the condition. Two, it seeks to figure out interventions that can help in the long run. Three, it seeks to create resources as well as other forms of support that can help out with relevant issues of a more immediate nature.
10. Believes that Forceful Economic Intervention Is Needed
Under the current circumstances, Hussman believes that forceful economic intervention is needed. However, it is important to mention that he believes that such policies will need to be implemented in the right manner. For example, help needs to be offered on a fair basis rather than based on personal connections. Likewise, help should be focused on the loss of basic income rather than either investment losses or the loss of extraordinary income.