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A five year downtrend would be exceptional! And unlikely, if one played the odds. It is more likely that we are near the bottom, barring abnormal shocks. My guess is that 1999 saw unusual inventory building in anticipation of supply disruptions in 2000, due to Y2K uncertainties, thus a blow off into early 2000 of stock prices. 2000 and 2001 saw reductions in orders, as inventories were consumed. Perversely, the supply chain can be dramatically affected by slight changes in orders at the end of the pipe. Each stage of the chain amplifies the delta in demand (and earnings), up and down. (Ref., The Beer Game). Because investors pay a multiple of growth, stock prices also amplify the change in corporate earnings. The whold system is extremely sensitive to changes in earnings.

Earnings are probably near their nadir this quarter, and in future quarters, will show positive y/y and pq/q growth as the subsidence of inventory glut, the technology advances, and the low interest rates work to spur new investment (as long as the consumer holds up his leg).

The future could be bright, if this country can maintain a reasonably safe environment for investment. That is the overriding uncertainty in the market at this time, I believe. Are the majority of company's books "honest"? (? = if the US govt would draw and quarter some of these CEOS, it would help) Will the US be attacked in a significant way in the near future? (?) Will the political bickering break down into civil disruption/conflict? (Unlikely, too much social control, too much of a stake in status quo) Will the Fed inflate the currency to avoid depression? (Yes, gold, currency, interest rates, real asset prices, financial asset prices, augur) Will the consumer continue to buy goods? (Likely, we are not in an austere mood)