Valuation limits returns, not a sell signal
The case made was that while US equity valuations are high and limit forward return potential, using valuation alone as a sell signal has been a terrible call historically.
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The Callback
Valuation market timing fails consistently
42 weeks between these two statements.
The analysis showed that over ten-year periods, changes in valuation ratios (like CAPE) have a ~0.9 correlation with equity market returns, while earnings growth matters far less.
The case made was that while US equity valuations are high and limit forward return potential, using valuation alone as a sell signal has been a terrible call historically.