The Nikkei index in Tokyo peaked 12-29-89 at 38,915. Now it’s 23,837 (a 38% loss) despite massive stimulus, gigantic government debt of 600% of GDP (double the US percentage), Quantitative Easing, negative interest rates, and outright purchase of equities by the central bank. Much of the last 30 years it traded near 10,000, a 75% drop.
Some real estate in Japan dropped 90% after the 1989 crash and some Japanese mortgages were sold with a 95% drop in price below par.
It seems a lot of bubbles result in a long term drop of 75%. The U.S. NiftyFifty stocks of the 1970’s dropped about that much (and never fully recovered when adjusting for inflation, despite the huge 1999 boom). Nasdaq crashed 78% (a 4:1 ratio) in the 2001 tech crash.
The U.S. SP index has a PE10 of 31, implying it needs to drop to a PE10 of 15, which would be a 52% drop. One bearish advisor, David Rosenberg, estimated its fair value is 1,800, which implies a 44% drop below the current price of 3221 is needed. Some bearish advisors expect more like a 60% drop which would place it at below 1,300.
A European bank stock index has dropped down to a 30 year low. A U.S. small cap energy stock index fund dropped 87% from a 2014 high of $54.50 to $7. 35.
The great 1720 South Seas corporation bubble crash took 150 years to recover.
The UK Treasury “GILT” bond yield dropped to a low level in 1815 (because of the end of the Napoleonic war) and stayed near there for 85 years.
The Dutch tulip bulb bubble of 1634 resulted in the price of a tulip going to $30,000, from which it has not recovered.
The U.S. economy and stock market are less of a bubble than the Nikkei of 1989, however, no one should expose themselves to the risk of losing 50%. Assuming the bears are correct then when U.S. stocks drop 50% they will only gradually increase in value by a small increment annually (subject to periodic episodes of volatility) rather than have a full V shaped recovery in a few years. Thus it might take a decade for stocks to breakeven after the SP crashes 50%.