I’ve posted Column Entry #50 to my weekly Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called Game Changers: Part Two.
Juicy Excerpt: Stock returns are slightly predictable at five years out but the correlation between valuations and returns is not statistically significant at this point. At 10 years out, statistically significant return predictions are possible but the range of possible returns is large; that is, the precision of the predictions that can be made is not great. Greater precision is possible at 15 years out and the valuation level that applies on the day of an index fund purchase tells us 78 percent of what we need to know to know the return that applies at 20 years.