JEF - IAI: Brokerage Stocks Are Likely To Be Punished Over The Coming Decade

• Brokerage stocks have high long-term beta, which means an extended equity downturn is likely to hit them especially hard.
• A high PE ratio and high long-term earnings growth in the S&P 500 suggests a "secular" bear market is imminent.
• Brokerage stocks are especially vulnerable to "secular" deflation and cyclical commodity inflation, especially in energy and fertilizers.
• "Secular" bear markets are cyclical markets.
• Cyclical slowdowns at the transition to a "secular" bear market should be considered warnings of sharply negative returns.

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