It's Time To Revisit The Disaster Scenario For Stock Prices

Henry Blodget
Aug. 24, 2015

The stock-market tumble of the past week has reminded everyone that stock prices also go down.

So this seems a good time to remind everyone that stock prices could go down a lot further. In fact, stock prices have to go down a lot further -- or, at least, have to stay generally flat for a very long time -- just to get back to historically average levels of valuation and performance.

Specifically ...

Today's stock prices are so extreme that a drop of 40% to 50% from the recent high would not be a surprise.

Indeed, it would take a drop of this magnitude just to get back to average long-term valuation levels, let alone cheap.

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