06/02/17

50% Correction Is Impossible! Really? [feedly]



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50% Correction Is Impossible! Really?
// Zero Hedge

Submitted by Lance Roberts via RealInvestmentAdvice.com,

There is little doubt currently that complacency reigns in the financial markets. Nowhere is that complacency more evident than in the Market Greed/Fear Index which combines the 4-measures of investor sentiment (AAII, INVI, MarketVane, & NAAIM) with the inverse Volatility Index.

The reason I revisit the index above is due to last Thursday's "3-Things" post in which I presented two arguments concerning the potential for a 50-70% decline in the markets. John Hussman's view was simply a valuation argument stating:

"To offer some idea of the precipice the market has reached, the median price/revenue ratio of individual S&P 500 component stocks now stands just over 2.45, easily the highest level in history. The longer-term norm for the S&P 500 price/revenue ratio is less than 1.0. Even a retreat to 1.3, which we've observed at many points even in recent cycles, would take the stock market to nearly half of present levels."

The second argument was from ...

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