November 20, 2008

Release of October PPI showed the largest month-over-month decline on record (-2.8%), which easily beat the prior extreme from October 2001 of -1.6%. With today's Producer Price Index showing costs dropping at a record rate, all comparisons of the current period to the 1970s pretty much go out the window.
Not the point of picking at the bottom, but picking value.

Only one/two bear markets that are now worse than 2008- coming out of the bear in 1932 is one of them.

The following chart shows the value of the S&P 500 from January 1871 through July 2007:










Now, we've got something! Using the logarithmic scale lets us see the true magnitude of the great bear markets for U.S. stocks since 1871. Our table below provides the data for each:





2 Yr Treasuries yielding less than 1%, which has never been seen.

S&P 500 is at 11 yr low.

In the latest 7-Year Asset Class Forecast from Jeremy Grantham and GMO (published October 31 - before the latest leg down in the market), the firm anticipates a 12.2% annual return from U.S. 'high quality' equities with active management, and approximately 11% from international developed markets.