Typically, the CAPE ratio has been the best predictor of future decade returns. When stocks are priced far higher than their historical average, a bad decade typically lies ahead. In contrast, when stocks trade far below their historical average, it usually bodes well for stock returns over the next ten years. Historically, the US stock market's CAPE ratios (a measurement of expensiveness) were similar to international stocks. But since 2009, that has changed a lot.
US stocks are ridiculously expensive, so don't put all your eggs in them.
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Soaring Stocks and Coffee Shops
Every weekday morning Jim stops at his favorite coffee shop. He orders a latte and settles into a chair to subtly watch people. He isn’t a creepy dude. He’s just social and curious. There’s a young couple at another table that Jim sees most days. But they don’t appear happy, so they might have had a…
