ebear -- I think the only difference between what you expect and what I expect is that you seem to be expecting deflation. I expect masive amounts of inflation.

We both agree that the markets are over valued and need to readjust. The difference is that I do not asume the dollar will maintain its purchasing power longer term.

The market will most likely retrace all of its gains but not in constant dollar terms.

In fact I expect at some point the market will find a bottom and go sideways even as inflation continues to erode the purchasing power the stocks represent.

One must also remember that markets never travel in a straight line. A massive recovery rally of perhaps 40% can happen at any time before the next down leg begins.