John Hussman is out with his Q2 letter, there is a lot of good info, but the beginning in particular stands out. The letter almost reads as if it is an apology letter over bad returns. Below is the ‘apology’ followed by the full letter in scribd.

Dear Shareholder,
In a financial environment that has become increasingly dependent on unprecedented fiscal and monetary intervention, I remain convinced that temporary distortions have not changed the durable relationship between valuations and long-term investment returns, and have not eliminated the tendency for markets to experience cycles of both advancing and declining values . The Hussman Funds continue to pursue a disciplined, value-conscious, risk-managed and historically informed investment approach focused on the complete market cycle .

Our respect for market history, adherence to discipline, and insistence on stress testing every aspect of our approach have all been handicaps to some degree during the advancing portion of this unfinished half-cycle . My decision early in this cycle to ensure the robustness of our methods to Depression-era outcomes resulted in missed returns in the interim . More recently, strenuously overvalued, overbought, and overbullish investment conditions that have historically produced violent losses have persisted – without consequence – much longer than has historically been the case . My impression is that this is not because these conditions no longer matter, but only because the anvil has not yet dropped .

Still, a century of evidence suggests that the speculative periods most hostile to our approach were typically followed by periods of market loss that were punishing to equities over the completion of those market cycles, dramatically reversing performance gaps (relative to a passive investment strategy) that often existed at speculative peaks .

This dynamic was clearly evident in the performance of the Strategic Growth Fund relative to the Standard and Poor’s 500 Index during the 2000-2002 and 2007- 2009 market declines . Historically, the average, run-of-the-mill bear market decline has wiped out more than half of the preceding bull market advance . I anticipate a similar dynamic over the completion of the present cycle

Full letter from Hussman below.

H/T Stock Jockey 

Hussman Annual Report