Portfolio Return as of 05/20/22:
2020: 25.65%
2021: 29.15%
YTD: 4.11%

Sunday, February 24, 2019

Stocks are still expensive, though not at all time highs

According to price-to-earnings or “PE” data tracked by Yale University finance professor and Nobel Prize winner Robert Shiller, the S&P 500 is about 75% above its historic average valuation. Ten-year forward average returns fall nearly monotonically as starting Shiller P/E’s increase,” warned hedge fund manager Cliff Asness of AQR in a 2012 research paper, as he studied the S&P 500 going back to the 1920s. Also, he added, “as starting Shiller P/E’s go up, worst cases get worse and best cases get weaker.

Today’s level? Compared to history, we’re in the most expensive 10% of starting valuations, according to Asness’ data. “Average” 10-year returns from here? Based on history it’s about 0.5% a year after inflation, he calculated.





Current Shiller PE Ratio: 30.56 +0.19 (0.62%)
4:00 PM EST, Fri Feb 22
Mean:16.61
Median:15.70
Min:4.78(Dec 1920)
Max:44.19(Dec 1999)

No comments:

Post a Comment

Thanks for the comment. Will get back to you as soon as convenient, if necessary.

Price controls again? Some people never learn

As I've mentioned before these pages, price controls that were last employed on a widespread basis during the 1970s inflation era were e...