this is it wrote:
“In 1934, following an 89% market collapse during the Great Depression, Benjamin Graham and David Dodd detailed the beliefs that investors had adopted during the speculative runup to the 1929 peak. They are identical to what we’ve observed in recent years. First, “that the records of the past were proving an undependable guide to investment”; second, “that the rewards offered by the future had become irresistibly alluring”; and third, “a companion theory that common stocks represented the most profitable and therefore the most desirable media for long-term investment.” Taken together, these beliefs ultimately contributed to “the notion that the desirability of a common stock was entirely independent of its price.” Surveying the rubble, Graham and Dodd observed, “The results of such a doctrine could not fail to be tragic.”
Encouraged by the same beliefs, investors drove S&P 500 valuations to levels even beyond the 1929 and 2000 extremes – levels that we associate with over a decade of negative expected returns even from current levels. At present, the stock and bond markets have declined enough to restore positive expected returns for a diversified portfolio that includes both stocks and bonds, but just barely.”
John Hussman, September 2022 Market Commentary
