Mish Shedlock’s investment management company, Sitka Pacific, provided this chart in their September letter (as a non-client, I only get delayed copies):
One lesson to be learned here, which they get into in the letter, is that prices bottom before valuation multiples. In the bears of the 1910s, ’29-early 40s and ’66-82, inflation appeared late in the game. BTW, this meshes with Kondratieff theory, where inflation leads to disinflation to deflation then inflation again, with asset values moving in tandem.
So, be prepared to buy in this coming wave down, if we get a nice drop over the next year or so, because select equities could be a nice hard asset to own through the turmoil in the currency and sovereign debt markets, which is likely to spread to the US, UK, Germany and Japan by later this decade.
“. . . select equities could be a nice hard asset to own through the turmoil in the currency and sovereign debt markets”
Good point. For those of us who do not hold gold outside of the country those equities might be a preferred asset to hold, given the possibility of gold regulation in the US, which I cannot completely discount. However, do you think a year or so will be enough time to know which brokerages are going to remain solvent over the remaining course of the bear market? Any suggestions in that regard?