Where Else are Investors Going to Go?

John Hussman of Hussman Funds has a Weekly Market Comment for January 30, 2006 which includes this amusing (or maybe not so amusing since it's painful for so many investors) parable:

A guy hears the doorbell ring one morning, opens the front door, and there's a snail on the doormat. So the guy picks up the snail, walks through his house, and tosses it out to the back yard. A few years later, the doorbell rings. The guy opens the door, and the snail just looks up and asks “now what was that all about?”

Treasury bills – despite unusually low yields during the past several years – have outperformed the S&P 500 index, including dividends, for what is now more than seven-and-a-half years (for an annualized total return of about 2.6% during this period). Stocks have gone nowhere, but they've gone nowhere in an interesting way. That's the problem with rich valuations – not that stocks decline predictably or persistently. Just that investors go through years of fluctuations, faithfully holding their stocks as investments, and in the end, find themselves just like that snail.

Do you feel like that snail?

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Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky