Tuesday, October 25, 2016

The Illusion That 
"Old Measures No Longer Apply"
John Hussman expects that, given current valuation extremes, the entire total return of the S&P 500 since 2000 to be wiped out over the completion of the present market cycle. "That loss is likely to be an interim low on another journey to nowhere, ultimately leading the S&P 500 to an estimated total return averaging less than 1.5% annually over the coming 12-year period. There are certainly extended segments of history - even during the period since 2000 - when stocks have been rewarding investments; particularly measured from points where valuations were depressed to points where they became elevated. But to believe that stocks are a rewarding investment, regardless of valuation, is to ignore a century of history." .. highlights how in recent weeks, there have been a lot of articles with the theme of "old valuation measures don't apply" anymore .. sees no evidence that the mapping between "reliable valuation measures and long-term, full-cycle market outcomes has been altered one iota. The illusion that old measures no longer apply is identical to what we observed during the 2000 and 2007 top formations, and is identical to what we’ve observed at valuation extremes across history."
LINK HERE to the essay

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