"My view on this is simple - if you've overestimated the long-term stream of cash flows by failing to adjust for elevated profit margins, if the prospective return on stocks is unusually low even on the basis of normalized earnings (as it is today), and if you've set your portfolio up in a crowded trade that takes record-high beta exposure to market fluctuations (as many institutions have now done), you just might be in for some trouble."
--John Hussman, Ph.D. in his weekly Market Comment
Could Dr. Hussman be talking about institutional investors such as (oh, let's just pick one) the Maine Public Employees Retirement System, which is over 60% invested in stocks and whose Top Ten equity holdings include the most "crowded" trade since tulips (Apple), a pharmaceutical giant on the edge of a patent cliff (Johnson & Johnson), and a mega-bank sitting on a ticking debt bomb (JP Morgan Chase)?
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