I’ve posted Entry #158 to my weekly Valuation-Informed Indexing column at the Value Walk site. it’s called Does P/E10 Do a Better Job of Making Return Predictions When Valuations Are at Extreme Levels?
Juicy Excerpt: Resistance to this idea is resistance to logic. Many investors don’t like to hear things said so bluntly. But that’s an obvious logical implication of the finding that valuations affect long-term returns. We have in the past 10 years grown more accepting of the idea that valuations matter. As more time passes, I believe that we will become more accepting that valuations matter in all circumstances, not just some.