Where will the stock sell-off end?

ONE thing to realise about a stock sell-off: You won’t know it’s over until long after it ends. But that doesn’t keep people from trying to pick a bottom. Valuation, sentiment and history each form a basis for study.

Reversion to a mean is the expectation. Which mean to revert to is the problem. A straightforward model in which elevated valuations return to normal could imply either a garden-variety tumble, or a truly awful one, depending on how “normal” is defined.