Oeistein Helle: Ongoing S&P 500 correction not like 1973, 2000 or 2007

Since 1938 "super bear" markets resulting in a 40 % or more drop in the S&P 500 from top to bottom has only occurred three times (1973, 2000, 2007)

Each of the three "super bear" markets have been driven by strong negative fundamentals or out of touch pricing of the index. As the current US and global economy is experiencing healthy growth in combination with a reasonable but somewhat bloated index valuation (see graph #1) I do not believe that we are entering into "super bear" market territory. In fact most S&P 500 sectors are currently trading at or close to 20-yr avg. pricing both on a forward and trailing basis (see graph #2)
The current correction (10 % drop in index valuation) may turn into a bear market (20 % drop in index valuation), however I do not believe that we are entering into a 2007 - 2008 type of situation as I do not observe a driver for such an event. In my humble opinion the current correction is starting to look like a opportunity to buy stocks on the cheap

1973 (-48.2 %): The termination of the Bretton Woods system in 1971 (gold standard) in combination with the 1973 OPEC oil embargo hurting the US consumer through the devaluation of the dollar and expensive oil. Double digit inflation
2000 (-49.1 %): Out of touch market valuation driven by big idea companies often lacking a business plan. Companies were valued by their burn rates and not their profits (or lack thereof). The S&P 500 was valued at a 27.2x forward P/E ratio vs 16.1x today
2007 (-56.8 %): A massive housing bubble was fueled by speculative lending practices which led to a subprime mortgage crisis. The collapse in housing prices in combination with the rising oil price sent the market into the abyss

Graph #1: Current S&P 500 valuation looks somewhat bloated but reasonable (nothing like 2000)