The S&P 500 fell as much as 25% this year as the Federal Reserve pulled its support for the US economy. John Hussman says valuations are still at levels seen in 1929 and 2000, during two of the most extended bubbles in history. Hussman warned that stocks face negative returns over the next decade, and that a devastating decline could play out in the years ahead. To return to normal valuation levels, the market would have to fall 58% further from where it sits currently, he said. Hussman’s preferred valuation measure is the ratio of total market cap of non-financial stocks to total revenues. In the chart below, historical norms of this valuation measure are shown in green, with the market price level shown in blue. . . .
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