What the S&P 500’s valuation may mean for future returns

Although the US stock market’s valuation is nearly as high now as it was at the height of dot com mania, we don’t expect the return from it to be as bad in the next decade as it was in the 2000s.
John Higgins Chief Markets Economist
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More from The Long Run

Long Run Returns Monitor

Long Run Returns Monitor (Nov.)

Our monthly Long Run Returns Monitor provides our updated long-term projected returns for major asset classes, as well as a summary of the macroeconomic forecasts which underpin them. All projections in this publication are as of 23rd November 2021. A more detailed explanation of our views can be found in our annual Long Run Economic Outlook and Long Run Asset Allocation Outlook.

25 November 2021

Long Run Update

COP26 a small step forward but much left to do

COP26 has progressed efforts to fight climate change, but there is still a significant gap between pledges and actual policies. Unless action ramps up this decade, countries may face a choice between accepting the costs of greater global warming or a rapid, and potentially disorderly, transition to a greener economy.

16 November 2021

Long Run Update

COP26 unlikely to alter economic outlook

The UN’s annual climate change conference, COP26, has the potential to be an important milestone but it is just one step along the path required to limit global warming. Accordingly, it will not on its own stop climate change from clouding the long-run economic outlook for many emerging markets in particular.

2 November 2021

More from John Higgins

Capital Daily

What to make of the S&P 500’s soaring valuation

The S&P 500 remains within a whisker of its all-time high, despite faltering a bit today. Although much of its gain since spring 2020 has reflected growth in earnings, its valuation has also risen sharply and in cyclically adjusted terms is nearly as high now as it was at the height of dot com mania. While that might ring alarm bells, we don’t expect the return from it to be as bad in the next decade as it was in the 2000s.

26 August 2021

Asset Allocation Update

What the S&P 500’s valuation may mean for future returns

Although the US stock market’s valuation is nearly as high now as it was at the height of dot com mania, we don’t expect the return from it to be as bad in the next decade as it was in the 2000s.

26 August 2021

Capital Daily

Assessing the risk to Treasuries from tapering

The muted reaction in the Treasury market following the release of the minutes of last month’s FOMC meeting may seem surprising given the revelation that most participants thought it could be appropriate to begin “tapering” this year. After all, this is sooner than had been envisaged by the medians of primary dealers and market participants surveyed by the NY Fed ahead of the prior FOMC meeting in June (the results of the surveys ahead of its July meeting have not been published yet). It can probably be explained by the fact that many Fed officials have talked about an earlier tapering since the strong July employment report, so expectations had probably already shifted, and by a risk-off mood in markets amid concerns about the COVID-19 delta variant. Yesterday the S&P 500 fell by ~1%. Meanwhile, the WTI crude oil price has slid to its lowest since May and the DXY dollar index is at a 9-month high.

19 August 2021
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