No. of Recommendations: 2
would that be approximately growth in book with a steady multiple?
No, it would be implicitly assuming an "average" valuation multiple at the end date.
I took a wild guess what both book and my own IV estimates will turn out to have been at end 2023 when the annual report comes out, and plugged those two into my sundry models of one year forward average real returns.
Most of the models use data only since 2008--the "modern era" of valuation multiples.
I then took the average of the real return forecasts, and added a guess of one year of inflation. I plucked 3.25% from the air.
Since these models are all of the general form "starting valuation level X gave average forward return Y in the past", they all implicitly assume that the trend of value growth will repeat.
Jim
