US stock market: How much can it drop?

The Historical Context

The following is an excerpt from John Hussman's weekly commentary dated April 18, 2016 (link). It lists the relative drop in the US stock market when previous bubbles burst.

Based on valuation measures having the strongest correlation with actual subsequent market returns across history, equity valuations have approached present levels in only a handful of instances: 1901 (followed by a -46% market retreat over the following 3-year period), 1906 (followed by a -45% retreat over the following year), 1929 (followed by a -89% collapse over the following 3 years), 1937 (followed by a -48% loss over the following year), 2000 (followed by a -49% market loss over the following 2 years), and 2007 (followed by a -57% market loss over the following 2 years). A few lesser extremes occurred in the 1960’s and 1970’s, followed by market losses in the -35% to -48% range.

Note added on Aug. 14, 2016: I Tweeted a relevant chart. Click here.

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