Bill Miller was buying homebuilders in masse beginning in the middle of '06. They continued to fall another 50%.
It was the biggest credit bubble in history. It seems naive to think the banks/investment banks will have the mess cleaned up in 2 quarters. Every other industry that has created too much capacity goes through a cleansing period where they take impairments/writedowns every quarter over 2-3 years. Tech/telecom in the late 90s; housing from 2004-07. Now credit with the banks/investment banks.
I think the banks/investment banks will still be taking writeoffs a year from now. And given the size of the writeoffs, I'd expect them to be EXTREMELY cautious and risk averse in any new assets they put on the books, which is going to hurt economic activity.
Hate to sound so bearish, but I'm just applying lessons I've learned over the past few years.