Valuation-Informed Indexing #515: Stock Returns Are Predictable But Not Rationally So

I’ve posted Entry #515 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Returns Are Predictable But Not Rationally So.

Juicy Excerpt: However, a recent article in Advisor Perspectives — The Remarkable Accuracy of CAPE As a Predictor of Returns, by Michael Finke — has caused Rekenthaler to soften his skepticism a bit. Looking at Finke’s work, which looks at how CAPE has worked as a predictor of returns from 1995 forward, Rekenthaler declares: “Now that’s a correlation. Have you ever seen such a tight fit between a stock-market signal and future performance? If so, let me know because I cannot think of such an example.”