“Every 3-month period of additional zero-interest rate policy promised by the Fed is worth about a 1% premium over historical valuation norms. Another year would be worth a premium about 4%. But with the market more than double historical norms on reliable measures, the Fed would have to promise a quarter of a century of zero interest rate policy before current stock valuations would reflect a ‘reasonable’ response to interest rates. Stocks are not elevated because low interest rates ‘justify’ these prices, but because the risk premium for holding stocks has been driven to zero. We presently estimate negative total returns for the S&P 500 on every horizon shorter than 8 years.”

http://www.hussmanfunds.com/wmc/wmc141013.htm

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