On My Radar: Stock Market Valuations And Forward Returns

On My Radar: Stock Market Valuations And Forward Returns by Stephen B. Blumenthal, CMG Capital Management

“Anyone in investments should know that when you add together a number of uncorrelating returns, something magical happens.”
– David Harding of Winton Capital Management

This week let’s take a look at current market valuations (high) and what they are telling us about probable 10-year forward returns (low). The stock market has had an outstanding five year run. With that, I believe, many individual investors have misguided expectations. The market is overvalued, over-believed and over-margined yet trend evidence remains positive and Don’t Fight the Fed an important theme. For now.

I share some concluding thoughts below (please note: the piece prints longer than normal...