I’m off to Asia, and have updated the archives up to about two weeks ago. Will send out the quarterly CAPE valuations in a few days. I’m hoping NDR will allow me to send CAPD, CAPCF, and CAPB too…
Below is a chart that has been floating around the web in various places. I know Jesse Livermore mentioned it in December as “The Single Greatest Predictor of Future Market Returns” with a R2 of > 0.9.
The thing is, almost of the long term valuation charts look similar to this chart for the same reason – the numerator is what drives them (simply, Price). The more it goes up, the lower future returns are and vice versa.
No download this time, just a chart. Future 10 year returns? Blech. (Ned Davis has a good piece this week too for subs of NDR titled “What Does Asset Allocation Tell Us About Long-Term Sentiment?)