The normal historical unwinding process after a magnificent equity bubble is for a devastating equity bust of comparable magnitude to follow. The bust is necessary to bleed off the gross bubble excesses and lay the solid foundations for the next boom. I know itâs no fun, but history is absolutely unambiguous in teaching investors the hard lesson that general market valuations, as measured by P/E ratios, plunge to half fair value (7x) at the pits of despair when a bust bear-market bottoms. If the S&P 500 was to become universally loathed as panic and capitulation reigned supreme, the index could conceivably fall to a difficult to believe level. In this case that level would be somewhere south of 700 and quite conceivably much lower.