Home > View From Up Top > Evolution of Valuations During Secular Bear Markets

Evolution of Valuations During Secular Bear Markets

Below, I posted a reblog from pragcap about market valuation metrics and how they have yet to dip to levels seen at prior secular troughs. Despite this being the 10th year of a Secular bear market, valuations have yet to dip to levels that could be considered "cheap". This is a major lynch pin in many bearish forecaster's models. I too, find it to be one more compelling piece of evidence for the long-term bear's case suggesting several more years of downside risk in the economy and financial markets.

Case/Shiller 10 year P/E chart – we are currently in the upper quartile. Not Cheap!


The graph below is pretty sweet too….good work Data Diary.

By: Pragcap

Good stuff here from our friends at Data Diary who have pointed out a chart of valuations during a bear market.  Many investors have been quick to note that many valuation metrics remain quite high (such as Shiller’s 10 year PE) and that the current bear market never hit historical trough levels seen at the bottom of other major bear market lows.  This chart shows the average valuation contraction of previous bear markets.  According to this data we could have quite a ways lower to go before a true bottom is formed:

Another chart for the annals – this one from Sitka Pacific Capital Management (see the original article here).

Bear market valuation contractions THE TOPOGRAPHY OF BEAR MARKET VALUATIONS

Categories: View From Up Top
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