WHAT KIND OF RETURNS CAN WE EXPECT OVER THE NEXT DECADE?

http://pragcap.com/what-kind-of-returns-can-we-expect-over-the-next-decade

Excellent analysis from John Hussman.  As always, this week's letter is a must read:

"Currently, the forward operating earnings model above suggests an average annual 10-year total return for the S&P 500 of 5.5%, while indicating that the S&P 500 was briefly and moderately undervalued at the 2009 market low. Not surprisingly, the 1988-1991 model projections underestimated the market's subsequent 10-year total return, as the period a decade later – between 1998 and 2001 – represented the extremes of the subsequent valuation bubble. Overall, the correspondence between projected and actual 10-year market returns is very close. Taken together, my impression is that this is a record that a reasonable and informative valuation model ought to produce."

Source: Hussman Funds

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