“The predictor I’m talking about is the Shiller price-to-earnings ratio (P/E), and it’s calculated by dividing the price of the S&P 500 index by the 10-year average of inflation-adjusted earnings. History shows that expensive markets tend to result in low, and sometimes even negative, long-term returns. And cheap markets tend to result in high, long-term returns. Sounds like common sense. But most investors ignore it. And right now the Shiller P/E ratio is telling us that the U.S. stock market is pretty expensive, which means U.S. stocks should produce a relatively low return over the next 10 years.”
http://thesovereigninvestor.com/2013/11/04/heres-sp-500-will-10-years/
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