Heavily Invested

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?)

Chart source



The Single Greatest Predictor of Future Stock Market Returns