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Could Equities Fall Back to 2009 Levels?

October, 2014

Yes, according to historical data on previous bear markets.  The average bear market has wiped out over five years of gains with an average decline of 38%.  However, the three deepest downturns (as measured by the duration of the previous bull market wiped out) each negated approximately 12 years of returns on average.  During the last downturn ending in 2009, a 60-year old investor would have seen their wealth evaporate back to age 48!  We are not calling for an imminent crash, although we think valuations look dangerously lofty and built on the false pillars of low interest rates, accelerated stock buybacks, and government money printing.

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