No. of Recommendations: 7
Total return before taxes in the 7 years starting in the middle of 1931 was -15.8%/year compounded for the cap-weight predecessor of the S&P 500
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I'm not sure I understand this. GTR1's approximation of the S&P {!S5T}, held continuously from 19310630 to 19380630, shows a CAGR of 0.4% over the period. Equal weight (!S5TE), for what it's worth, is said to have returned 2.58%.
Very sorry, a typo in my formula.
The worst stretch since 1930 of exact length 7 years has been (real total return) -8.56%/year compounded, or -46.3% end to end. That was starting October 6 1967.
Though it's not the same as making any kind of a prediction, based on smoothed real earnings yield of the S&P 500, the US market is currently 95.6% more expensive that it was that day in 1967. Smoothed earnings yield then 4.90% (analogous to a CAPE of 20.4 *before* the drop), smoothed earnings yield now 2.51% (analogous to a CAPE of 39.9).
It would be great if yesterday's close were to turn out the absolute market top for this cycle, 7676.77 is such a nice memorable number, like the 2009 bottom at 666.
Jim
