Value Line

There are things we won't recall
And feelings we'll never find
It's taken so long to see it
'Cause we never seemed to have the time
--Phil Collins

Nice reminder from John Hussman that markets generally remain in an overvalued state. While we have come off the tech bubble highs, valuations remain rich compared to historical levels.

As Dr J frequently notes, overvaluation reduces expected returns moving forward. His models, which tracks very well versus actual returns, suggests prospective 10 yr returns at under 5% annually.

While that might seem attractive given 'risk-free' rates at financial repression levels under 1%, the ride on equities toward an annualized 5% is likely to be bumpy. For example, were equities to revert to mean valuation levels, indexes could easily be cut in half from here.

Those plowing significant monies into stocks here thinking that we're in a 'new normal' do so quite literally at their own risk.

position in SPX