Gary Shilling: S&P 500 To Fall Another 30+%
After 15 years of being overvalued, stocks have finally fallen modestly below fair value, which we put at about 950 on the S&P 500 (versus today's 880). As we've noted frequently in the past few months, the three huge bubbles of the past century have been followed by stocks bottoming at about 50% below fair value. This would be about 500 on the S&P 500 and 5,000 on the Dow.
Three prior events do NOT form a conclusive sample size, and stocks may well have already hit bottom. We doubt this and find the "S&P 600" story persuasive, but given the market's current valuation, we're also comfortable adding new long-term money at this level.
Here's an interview we did on TechTicker yesterday with economist Gary Shilling, who has been more right in recent years than just about anyone else.