Reputed investor John Hussman breaks down why investors are placing way too much faith in possible Federal Reserve rate cuts.
, isn't here to dispel that notion. He does, however, think that further Fed-emboldened risk-taking would be a massive mistake for both investors and the market at large.
Hussman admits this is true during periods when cash flow is either stationary or growing. But he also adamantly points out that this is not one of those times. In his mind, abiding by the idea that rate cuts will save the market is a mistake. "Even the mildest retreat in valuation multiples will then likely produce a multi-year period of negative S&P 500 total returns," he said."All of this is just basic arithmetic."
Hussman says it depends on the risk appetite of the market. Sure, investors are feeling invigorated right now, but once they flip the switch into worry mode, he says things could fall apart quickly. That's right, even the precious Fed won't be able to save the market.
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