Warren Buffett’s mentor Benjamin Graham looked at stock prices against their 10-year average earnings per share to gauge value. On that reckoning stock prices are only sightly cheaper than their long-term average for the first time since 1991. Stocks have been overvalued for a long time.

Could a long period of sub-average valuations follow for stocks? Perhaps but we clearly still have to find a bottom in stock prices first. They always over-correct on the way down, a reverse of the irrational exuberance of the upside.

How long will that take? The most optimistic point to the spring next year but increasingly experts suggest the middle of next year might be the time to buy, presumably after people sell in May and go away.

To support the Graham analysis you can also turn to the q-theory. This considers the market capitalization of a company compared to the net worth of its assets. But again we sadly only arrive at the fair value position, and there is no buying signal.

In short, at this stage any rallies in stock markets should be seen as selling opportunities, if by mischance you still have US equity investments - and by implication most global stock markets will also follow this trend so lighten up there as well.

This column posited 7,000 on the Dow and 3,300 for the FTSE at the start of the autumn, and we nearly got there. It looks like 2009 will see even lower index numbers, and even then it is going to be hard to call a true bottom recalling the 1930-32 down wave (see graph).

How far US economic policy will offset the depressionary forces in place is the big call for 2009. But it is notable that at least economic policy is different this time. Whether it will work is another thing.