The red line (right scale) is the average
annual nominal total return of the S&P 500 over the subsequent 12 - year period.
As a result, the most historically reliable valuation measures now suggest that the S&P 500 will experience a net loss over the coming decade, while including broader (if slightly less reliable) measures results in projected S&P 500 10 - year
annual nominal total returns of about 1.4 % annually (see Ockham's Razor and the Market Cycle for the arithmetic behind these estimates).
The next chart shows the margin - adjusted CAPE on an inverted log scale (blue), along with actual subsequent S&P 500 average
annual nominal total returns (red).
Not exact matches
The following chart shows the same data on an inverted log scale (blue line, left), along with the actual subsequent 12 - year
nominal average
annual total return of the S&P 500 Index (red line, right).
The
nominal,
annual required
total return can be approximated as the real required
return plus the rate of inflation.