What really drives stock returns? 1) Well first it is not GDP growth. This one may come as a surprise. Many people think GDP growth is key to stock returns but as shown in Chart 1, from Ben Inker of asset manager GMO, there is no discernible relationship between a country’s GDP growth and its […]
long-term returns
The Stock Price Valuation Debate
Fed Chair Janet Yellen’s early May pronouncement that “…equity market valuations at this point are generally quite high” caused quite a stir with investors concerned that another market “correction” was just around the corner. Many who believe that stocks are overvalued today point to recent readings of the Cyclically-Adjusted Price to Earnings (CAPE) ratio. This […]
