The secular bear market that the US has been caught in for a better part of the last decade will end. Eventually. The only question is when. Last week we reported [5]that the bulk of market gains year to date, has been driven exclusively by PE multiple expansion, which is to be expected: EPS forecasts for the end of 2012 are now the lowest they have been since the beginning of the year. Yet while such sharp, sudden and short and bear-market rallies, exclusively on the back of the global central banks, are to be expected, the bigger question is how much more of a secular decline in PE multiples is to be expected before the bear market ends and a new bull market can begin. As the following chart from Crestmont Research [6]shows there is quite a bit more to go, even with Fed assistance (or rather, because of it, and its forced rejection of reaching a fair clearing price sooner rather than later), before the bear market is officially over. Just over 50% more. To the downside.
How the Bear Market declines have looked in perspective, and where we ultimately have to go before all the artifical supports are cleared out:
And the Bull Markets preceding them...
h/t Things That Make you go Hmmm


