ROBERT SHILLER: THE S&P WILL RALLY 13% IN THE COMING 9 YEARS….
31 December 2010 by Cullen Roche
16 Comments
Few economists have been more accurate over the long-term than Robert Shiller. Shiller is extremely pessimistic about the future returns of the S&P due to the high valuation currently attributed to equities. He predicts the S&P will finish the year 2020 at 1430 – a roughly 13% return over the coming entire 9 years….
Source: CNBC
My ass TPC.
The market is heading to new all time highs in 2011!!!!! Happy New Year!
Now we might get a spring pullback, but post June this sucker is ready to rock.
Hah! 2011 will be remembered as the year the music died. Expect gridlock in Washington and without heavy doses of fiscal stimulus, the economy will be exposed as the drunken new years reveler that it has become, unable to stand on its own two feet. Falling housing prices will threaten banks into more losses and writedowns, and the problems in Europe simply aren’t going away. Can we rally to new highs with minimal participation from financial stocks, the ones that should be rallying hard in a 0% interest rate environment? Can global markets rally when Europe suffers a sovereign default? Excess debt was and remains the main enemy, and it takes years to work it all off in a balance sheet recession. How far we fall will depend on Washington and what else the Bernank has up his sleeve. But new highs? No way.
How is that forcast “extremely pessimistic”? He’s just predicting below average returns (which is a no-brainer given that valuations are above average), not a collapse.
I’d call a 1.4% compound annual growth rate pretty bearish….You wouldn’t?
“I’d call a 1.4% compound annual growth rate pretty bearish….You wouldn’t?”
The index doesn’t include dividends, so it’s actually 3-4%. So like I said, below average but not a disaster.
I guess it’s just a matter of opinion then, but I’d say that any 10 year period where bonds are predicted to outperform stocks is pretty gloomy.
If stocks have some sharp drops during these next 9 years, there could be some really nice buying opportunities.
These predictions are probably spot on and also helpful for parameter framing. However, as the past six months shows, they drastically understate how huge all the opportunities inbetweem can be.
He says the double housing dip is “too early to call, but not too early to worry about”!
Nicely put.
The meaning of this is that there is no need torush into stocks now. Attractive entry points will develop given the current valuations.
Happy New Year!!
As years go by, things lose their luster – they get old. Inevitably we toss these fads that have lost their allure down the tubes to never again regain their once mystic allure.. Out with the old and in with the new – as it is said.
This past year saw the fall of the ‘trillion’. Call me old school but I remember when that number seemed much bigger. Trillions are getting tossed around as freely as rocks in the Gaza strip now; throw a trillion on the European sovereign debt crisis, throw a trillion for for a stimulus package, divvy out .6 trillion for QE2, why not toss an extra 3 trillion in there for a war while we’re at it… it’s only trillions after all.
I for one hope that 2011 is more rational.
I hope that gold stops rallying on the assumption of inflation or the renewal of the gold standard. I hope that stocks don’t rally on news that the economy is so poor we need a new round of QE. I hope that we no longer allow silver to rally on beliefs that were discredited 30 years ago.
And lastly, I hope that TPC has a wonderful new year… thanks for providing such a great free service! You are a must read.
Happy New Year to all.
Thanks Adam. It’s my pleasure.
Only china matters, and it is not looking pretty.
Happy new year
Does Shiller’s prediction factor inflation?
The population in the developed world are suffering due to the hangover from excessive borrowings from lenders who lent to anyone on the street to maximise their own bonuses.
The problems have been compounded by Outsourcing and Rampant Speculation allowed in all the exchanges. The problems are hereto stay as till date no one in the political arena has even acknowledged the problems let alone find solution to them.
The too big to fail bunch of banksters have a lot of influence on the political class, the rule makers and the rule enforcers due to their enormous purchasing power. So irrespective of the position in the government, everyone works for the benefit of the banksters.
The rest of the population have to be dumped with lots of problems like unemployment, high cost of living (thanks to speculation in commodity exchanges), foreclosures, etc. so that they don’t devote their thoughts to the root of all problems and revolt against the comfortable arrangement between the banksters, central bankers and the governments.
This too big to fail group has grown more powerful in size and influence in the last two years and is likely to end up being too big to bail bringing down complete economies of countries with them
http://www.marketoracle.co.uk/Article24581.html
don’t forget he said it was inflation adjusted PE ratio, and 1.3% inflation adjusted return. you have to take Ben Bernanke into consideration. Bernanke is 3% average. If you get less than that he will inflate the hell of it to get that, like the past two years. the inflation in the past two years is less than 1%. Maybe in the next two years the inflation will be 6%-8%. then average 10 years come to 3%.