“Finally, my impression is that many investors are vastly overestimating their tolerance for risk. The argument that ‘well, the stock market might go down, but it always comes back’ seems to be an increasingly popular way of dismissing risk entirely. Unfortunately, that argument only works on the way up to hypervaluation. It does not work on the way down.”
USAGOLD note: In a scholarly way, Hussman gets down to the nitty-gritty in his latest newsletter. We keep coming back to a footnote to modern economic history: Following the crash of 1929, it took 26 years for the stock market to return to the high registered just before the crash.