10 and 15 year forward returns

Discussion in 'Economics' started by Covertibility, Jan 1, 2012.

  1. Anybody track these kind of things??

    [​IMG]Source:Estimating Future Stock Market Returns

    10 year forward predicts 3.75% and the 15 year forward roughly 1.5% from Dec. 9th's close. Get this, at the high of the year, the 15 year forward predicted a 0% real return.

    The scary thing is that at the end of the 2 prior secular bear markets, ~1942 and 1982, the forwards hit their peak near 14%. You look at where the market is today and if the normal for the ending of a secular bear always results in PE compression that in part produces the above mentioned peaks in the forwards, then there is at least one more disaster on the horizon.

    Throwing in another observation that I picked up recently, if anyone follows the Ivy Portfolio model, you'll notice that the returns of that model outperform the 'buy and hold' comparison during secular bear markets but under perform in secular bull markets. Just FYI, the VTI is just a hair below the $65.14 buy point.

    At 10:21 AM, January 1, 2012, the Dear Leader Kim Jong-il is still dead. That is all.