Notebook: testing the bear market case

The latest monthly report of the Odey Odyssey fund, managed by former Barclays strategist Tim Bond, lays out his case for thinking that we are heading for a severe bear market - a view that he has held to now for well over a year, and which evidently has not so far materialised. His starting point is the conventional (and historically correct) view that high readings of the cyclically adjusted PE ratio produce below average returns ten years later, as this chart demonstrates.

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