Homepage / Investment / History says there's a 99% chance stock market returns will be subpar from here
Safe Uploading and Downloading Business Files How to Select the Best Board Management Software How to Organize the Work of a Company “gerçek Parayla En Iyi Slot Makineleri Ve Spor Bahisler Which is the Best Podcast For Stock Market Beginners? Virtual Data Room Facts How to Protect Confidential Documents for Boards Advantages of Online Meetings Business Issues to Consider When Choosing a Data Room Provider What Is a Data Room? Virtual Board Room Software Due Diligence Risk Factors How to Choose a Reliable Tool for Data Exchange test Users535352253 Board Software and VDR Programs Business Operations Management Software Keep Data Safe and Protect Your Business Data How to Conduct a Board Self-Assessment Uncomplicated Ways to Simplify Daily Business Transactions Due Diligence Blog Digital Data Rooms for the Netherlands The New Era of Business Software and Reporting What Types of Businesses Use VDR Software? Ma Analysis Mistakes The Corporate Governance Role Board Room Apps Secure Board Management With Secure Board Portals What Happens at Board of Directors Meetings? Board Room Software Review How to Prepare Board Rooms for Effective Board Meetings Board Room Software Boosts Performance and Communication Selecting a Secure Data Room Review Local Data Room Service Review How to Find the Best Virtual Data Room Review What to Look for in a Data Room uk Provider Document Storage and Distribution Software Everything About VDRs Corporate Software Advantages How to Choose a Virtual Data Room Provider The Most Secure Way to Transfer Files How to Manage Online Board Meetings Benefits Virtual Data Room Solutions – Must-Haves for M&A and Due Diligence Best Data Room Functions for the Different Types of Industries How to Choose a VDR Software Provider How to Choose an Online Board Portal The Benefits of a Boardroom Review Board Room Online Solutions – How to Get the Most Out of Your Board Meetings Why You Need a Board Room How a Board Room Blog Can Transform Your Business Choosing the Best Board Room Format How to Have Productive and Engaging Board Directors Meetings Choosing the Right Virtual Data Room How to Keep Safe Documents Storage Teaching Kids About Online Safety Avoid Costly Mistakes With Free Data Room Services Corporate Virtual Data Unlimited Data Room Software For Due Diligence Leading Business Software Features to Look For Secure Online Data Rooms Solutions How to Keep Share, Edit and Delete Your Data Safe Virtual Data Room Software Secrets for M&A Due Diligence What to Look For in Boardroom Providers Board of Directors Blog Posts How to Deliver Value at Your Board Meetings How to Have Effective Board Meetings Responsibilities of Board Members Deal Management – How to Effectively Manage a Complex Sales Pipeline Data Rooms For Mergers And Acquisitions How to Have a Successful Board Room Meeting Choosing a Board Room Service Provider What is a Board Room Service? Board Room Software Review – Choosing the Best Portal for Mother Board Meetings Why a Board Room Providers Review Is Important What Is a Board Room Review? Venture Software for VC Firms What Is an Assessment Report? The Importance of a Tech Audit Popular Business Applications What to Look For in a Data Room App What Are Business Applications? How to Choose a Virtual Data Room How to Plan a Data Room Review Coronavirus Guide What is a Virtual Data Room? What Is Data Science? What Is an Operating System? Turbotax Small Business Review How Online VDRs Are Used in M&A Deals Why Choose VDR Software? The Power of Business Software The Benefits of a Software Board Online Data Room Review The Importance of Tech Knowledge Improving Accuracy of Financial Data Online Business Records – How to Keep Your Online Business Records Accurate and Secure What is a Board Portal De? DealRoom Review – A Review of VDR Software M&A Due Diligence for Private Companies The Virtual Data Room Review


History says there's a 99% chance stock market returns will be subpar from here

Investors may be in for disappointing market returns in the decade to come with valuations at levels this high, if history is any indication.

Analysts at Goldman Sachs pointed out that annualized returns on the S&P 500 10 years out were in the single digits or negative 99 percent of the time when starting with valuations at current levels.

In a chart, they point out that the S&P’s cyclically-adjusted price-to-earnings ratio (CAPE) is currently around its highest historical levels. CAPE is a widely followed valuation metric developed by Nobel Prize winners John Campbell and Robert Shiller.

The chart shows how the S&P 500’s 10-year-out returns are mostly below 10 percent or negative when CAPE is around historical highs.

Here’s the chart:

Source: Goldman Sachs Asset Management

“In light of high equity valuations and the potential for lower returns, we see the case for a fresh look at alternative strategies” such as international small-cap stocks, Goldman said in its third-quarter outlook containing this chart.

“International small caps may be well positioned to benefit from the global economic expansion,” they said. “International small caps’ exposure is 70% cyclical by sector and includes a relatively high degree (55%) of domestic revenue drivers. These domestically-oriented companies in the past have also been better positioned than international large caps during periods when broad international equity markets have outperformed the US.”

The S&P 500 has had a banner year thus far, advancing 10.4 percent and posting record highs. However, the index’s sharp rise has raised concern that stocks may be too expensive.

Despite this dire historical data, many strategists will tell you not to drastically change your long-term asset allocation philosophy based on valuations. Plus, a single-digit return isn’t so bad, considering the potential returns for other asset classes out there.

“The most important thing with respect to the CAPE ratio is that it should be used to set expectations, rather than to time the market,” Michael Batnick, director of research at Ritholtz Wealth Management, told CNBC via email. “If you pay more for an investment, you should expect to receive less in return.”

“But jumping in and out of the market because stocks appear expensive, is a very difficult way to invest,” said Batnick, who tweeted out the Goldman chart on Sunday.

Batnick also noted CAPE has spiked 38 percent since June 2014. In that time period, the S&P has gained 25.3 percent.

Source: Investment Cnbc
History says there's a 99% chance stock market returns will be subpar from here

Comments are closed.