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What happens when you buy assets that have crashed 60%-90%


From Mebane Faber:

We’ve done a lot of articles on value and drawdowns on the blog before (search the archives).  I was curious what happens when you bought the U.S. equity sectors back when they were really hammered (French Fama to 1920s).

Average three-year nominal returns when buying a sector down since 1920s:
60% = 57%
70% = 87%
80% = 172%
90% = 240%

Average three-year nominal returns when buying an industry down since 1920s:
60% = 71%
70% = 96%
80% = 136%
90% = 115%

Average three-year nominal returns when buying a…

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