Markets everywhere are falling. Japan down another 4% today. China another 2%. Tech stocks in the US were down 3% to Black Monday lows with futures down. Emerging market currencies like Brazil are breaking decade lows. The Russian Ruble is nearing record lows, which makes sense, considering Putin’s army is now invading Syria and rousing the United States, echoing way too much of the Cold War for comfort.

It’s times like this when common sense starts to slowly return to investors. By that I mean, the way that people value stocks starts to change and begins to actually make a bit of sense. No longer is it “How high will it go?” or “How much will someone else pay for these baseball cards? but “How much is it worth to hold it?” If it isn’t worth the risk of holding it, if it doesn’t literally pay to hold it, it can keep falling. But if it does pay, the decline can stop before bear market bottom is hit.

The defensive stocks are fine through all this. 888 and Paddy Power, which I gave the #1 and #2 defensive ranks respectively, are weathering the decline just fine.  888 is up 26% on the year while the FTSE 100 is down 11%. Paddy Power is up 24%, with a little help from a good merger. And Macau keeps crashing. When will that end?

I believe we are closer to the bottom than the top, but the bottom could be a while off still. To give a very broad historical perspective here, during the roaring 20’s and its concurrent equity boom from June 1921 to June 1929, the US money supply zoomed up 62%, from $45.3B to $73.26B (see page 92). That’s 62% in 8 years. The ensuing crash wiped out 90% of the boom value by the time everything bottomed.