2011 Year-End Valuations
From the December 2011 newsletter:
As mentioned last year, valuation ratios such as P/E are not very useful in making one year market predictions. This is disappointing, since they do a fair job of predicting longer-term returns of at least 5-10 years. As a result, you will not see a market forecast from us for 2012 or any other single year, unless we can support it with a high standard of evidence.
The next best thing is to evaluate the markets today using those valuation ratios and consider how that affects future returns in the 5-10 year time frame. It’s not as exciting, but it’s far more responsible and reliable based on historical market data.
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