Looking at these graphs, you can guess
that future equity returns are affected by changes in inflation and real interest rates, but here's proof:
Financial planners have warned us that this kind of gain is about all we should budget for in
future equity returns, but it's hard to accept that kind of performance when you are looking over your shoulder at a boffo year in the U.S.. All the reason, we say, to spread your money around and not keep too much at home.
History's best stock market indicator is flashing red right now, indicating a high probability that
future equity returns will be far lower than average.
When the defaults come,
future equity returns are low, because financing rates rise, killing some and wounding others.
When yield spreads are very high,
future equity returns are high, because returns come as spreads tighten.