" While your comments have been spot on in the last weeks, John Hussmann assesses the current return/risk ratio as being in the worst 2.5% in history. Based on your assessment, what percentage of funds do you believe I should have invested at this time and should I have a relatively tight stop-loss just in case Mr. Hussman is correct? Thank you”

Eoin Treacy's view Thank you for this interesting question. John Hussman is one of the most erudite advocates of a hedged approach to investing anywhere. He expresses a particularly bearish view in this note.

As investors we have just witnessed the best start to a year in a very long time. Short-term overbought conditions are evident across a range of indices from the Nasdaq-100 to the S&P and a number of Asian and Latin American markets. Some markets, such as India are at least unwinding those overbought conditions, and the risk of a reaction is increasing just about everywhere.

However, it is our view that stock markets entered a cyclical bull in October. Today is probably not the best time to add new money to the market. Once support has been found, potentially in the region of the 200-day MA, following a reaction, would offer a better risk adjusted entry point.