Thanks for posting this paper AdrianC. I thought it was really interesting and covered a lot of ground. Many parts of the argument have floated around in the valuation space, and it’s nice to see a systematic run through of each factor, combined with a quantification.

It matches what I think many of us experience. It’s an expensive market and still risky due to the elevated valuations. Forward implied returns are not great. But it is high valuation within a range similar to what has been seen before. It isn’t the exceptional valuation spike seen once or twice before on history.

That is all good. As an investor you still have to put on your big boy/big girl pants and recognize that risk is still elevated. A drawdown can be painful and still pretty substantial. Just maybe not riding on the razor edge that CAPE implies.