Dr. John P. Hussman has developed a US stock market valuation method which has the highest correlation (92%) to subsequent 10 year returns when compared to all other measures (such as the Shiller CAPE and Mkt Cap/GDP).
The following chart illustrates Hussman’s Market Cap / Gross Value Added (GVA) measure and the subsequent 10-year returns for the S&P 500 since 1947.
The current level is associated with a flat 0% subsequent 10-year return.
Plus, current valuations translate into a 40-60% loss in the next 5 years as illustrated below.
For details on Dr. Hussman’s approach please go to this … link.
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