Subject: Re: Grantham: In which stage are we?
I was thinking recently about past recessionary bear markets, considering how useful the degree of drawdown in past recessions could be as a guidepost for what to expect in this one. And a potentially significant wildcard this time is high inflation.

Last year, we saw almost 10% inflation. So if we measure the drawdown in the market since then but also account for the decline in purchasing power, one could argue that we've already experienced a much more significant drawdown than measuring the indexes' falls from highs would suggest.

And if we saw another couple of years of ~10% inflation, even if equity prices remained flat/stagnant from over that time period without significant further deterioration, the real losses in terms of purchasing power would be approaching 50%.

This train of thought leads me to think that if anyone intends to use past drawdowns as a guidepost for when to re-enter, it'll be important to account for the effect of inflation in doing so.

I welcome any thoughts on the above.