With major US equity indices free falling over 6% today Wednesday, ending below their October lows and now being back to 2003 levels the latest bear market sucker’s rally is now officially over. A cacophony of delusional bulls – including allegedly savvy investors such as the Sage of Omaha and other luminaries – were spinning for the last month the fairy tale that markets – especially equity markets – had fallen so much that a bottom had been reached and that this was the time to start buying equities. Some of us never believed this self-serving spin and warned repeatedly that both equity markets and credit markets had further severe downside risks (20% to 30% lower for equities).

Let’s flesh out the details of this bust of the latest bear market sucker’s rally and consider the future outlook for risky assets…