J-Texas-1

Market Adjustments: Learning to Love a Bear Market

OK, here's the thing. Everything said in the article is true. But it's missing one big point: the higher they fly, the farther they fall. What is the historical market P/E and PEG? What are they in bear markets? Recessions and/or depressions? What are they when multiple bubbles of record sizes burst at the same time?

If I inflate the hot air balloon and rise to Mount Everest, only to lose my flame and fuel at the peak, do I fall just the first 7,000 feet (25%)? Or do I fall a lot further?

The Emperor has no clothes. Everyone's now admitting that. Who has confidence in an Emperor with no clothes? Who will abide by his country's rules after admitting to themselves that they were fooled for years?

Much bigger fall to come. Go back to historical bear market and depression-era valuations (for the remaining companies that will survive, of course). Use those approximate valuations to find the bottom.

After a capitulation, of course. The Emperor's subjects must rebel to purge their embarrassment and anger before we can move on.