Search Results for: return on equity

Introducing the Total Return EPS Index: A New Tool for Analyzing Fundamental Equity Market Trends

In late December of 2010, with the S&P 500 pushing through the mid 1200s on the heels of QE2 exuberance, my favorite financial economist–the great Robert Shiller–made what will likely turn out to be a very inaccurate prediction.  To be … Continue reading

Posted in Uncategorized | Comments Off on Introducing the Total Return EPS Index: A New Tool for Analyzing Fundamental Equity Market Trends

A Critique of John Hussman’s Chart of Estimated Future Equity Returns

Of all the arguments for a significantly bearish outlook, I find John Hussman’s chart of estimated future equity returns, shown below, to be among the most compelling.  I’ve spent a lot of time trying to figure out what is going … Continue reading

Posted in Uncategorized | Comments Off on A Critique of John Hussman’s Chart of Estimated Future Equity Returns

Visualizing Developed Market Equity Returns: 1970 – 2013

The following chart shows nominal total equity returns in local currency terms for select developed market countries from the beginning of January 1970 through the end of August 2013. The UK is way out ahead of the pack, almost doubling … Continue reading

Posted in Uncategorized | 1 Comment

The Impact of Taxes on Investor Returns

If you had invested $100,000 in Altria Group ($MO) on March 31st, 1980, and reinvested the dividends, the position today would be worth $93.6MM–a 21.0% annualized return. If you had invested the same amount in Berkshire Hathaway ($BRK-A), the position … Continue reading

Posted in Uncategorized | Comments Off on The Impact of Taxes on Investor Returns

Beer before Steel: Ranking 30 Industries by Fundamental Equity Performance, 1933 to 2015

From January of 1933 through July of this year, beer companies produced a real, inflation-adjusted total return of 10% per year. Steel companies, in contrast, produced a return of 5%.  This difference in performance, spread out over 82 years, is enormous–the … Continue reading

Posted in Uncategorized | Comments Off on Beer before Steel: Ranking 30 Industries by Fundamental Equity Performance, 1933 to 2015

Using Total Return EPS to Decompose Historical S&P 500 Performance: Charts from 1871 to 2015

In this piece, I’m going to do five things: First, I’m going to clarify the purpose of Total Return EPS, what it’s trying to accomplish.  In a single sentence, the purpose of Total Return EPS is to convert dividends into … Continue reading

Posted in Uncategorized | Comments Off on Using Total Return EPS to Decompose Historical S&P 500 Performance: Charts from 1871 to 2015

Global Stock Market Valuation and Historical Real Returns Image Gallery

In this piece, I’m going to analyze the historical local currency real total returns of different stock markets around the world: 46 different large cap indices, 12 different small and mid (SMID) cap indices, and, for the U.S., 4 different style indices–growth, … Continue reading

Posted in Uncategorized | Tagged , , , , , , , , | Comments Off on Global Stock Market Valuation and Historical Real Returns Image Gallery

Forecasting Stock Market Returns on the Basis of Valuation: Theory, Evidence, and Illusion

In this piece, I’m going to present and explain a simple, easy-to-understand method of forecasting stock market returns on the basis of valuation.  I’m then going to insert the popular Shiller CAPE into the method to assess how well the historical predictions … Continue reading

Posted in Uncategorized | Comments Off on Forecasting Stock Market Returns on the Basis of Valuation: Theory, Evidence, and Illusion

A Conservative Estimate of 10 Year Total Returns for the S&P 500

In prior pieces, I’ve stated that I think the S&P 500 at around 1775 can return between 5% and 6% per year over the next 10 years, a number that is significantly more attractive than the yield offered by the 10 year … Continue reading

Posted in Uncategorized | Comments Off on A Conservative Estimate of 10 Year Total Returns for the S&P 500

Valuation and Stock Market Returns: Adventures in Curve Fitting

My prior piece on asset supply has received significant interest, and so I feel an obligation to clarify.  The title, “The Single Greatest Predictor of Future Stock Market Returns”, was something of an intentional exaggeration, chosen not only to draw attention to … Continue reading

Posted in Uncategorized | Comments Off on Valuation and Stock Market Returns: Adventures in Curve Fitting