Apparently, we have clear sailing for another five years for stock prices:

“We surveyed banks, we combed the academic literature, we asked economists at central banks. It turns out that most of their models predict that we will enjoy historically high excess returns for the S&P 500 for the next five years.”

Sure, there are some weasel words in that prediction (“excess returns”), but it is a pretty strong statement. And it’s not like these models have a poor track record of always being wrong, right?

But the good economists at FRBNY were not satisfied with just the mathematical predictions, they aimed to measure just how robust these predictions were. And they found their answer:

“We find that the equity risk premium is high mainly due to exceptionally low Treasury yields at all foreseeable horizons.”

Well then, it’s not like there is any artificiality in treasury yields, so party like its 1999!

Print Friendly, PDF & Email