Tag Archives | market risk

RecessionALERT Valuation Index (RAVI)

PART-1 There are currently 4 mainstream models used to forecast 10-year total returns on the SP-500 (dividends re-invested) The Shiller CAPE ratio (PE10) The Warren Buffet Indicator Tobin’s Q-Ratio Average Investor allocation to stocks The non-linear quarterly correlations between these four models (x-axes) and achieved 10-year future total returns (y-axes) on the SP-500 since 1970 are shown below: Whilst there have been successful variations that improve long-run 10-year return correlations slightly (such as John Hussmanns’ Peak Earnings version of the Shiller […]

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