When the NYFed asks, “Are Stocks Cheap?”, does anyone listen?

Anyone ELSE remember the time when EF Hutton spoke and everyone listened?? We get the exact OPPOSITE feeling from NYFed asking about stocks …

…The simplest predictive method is to assume that future returns will be equal to the average of all past returns. It turns out that it is remarkably tricky to improve upon this simple method. However, with so many models at hand, we couldn’t help but ask if any of them can, in fact, do better….At face value, this result means that the models are actually helpful in forecasting returns. However, we should keep in mind some of the limitations of our analysis. First, we have not shown confidence intervals or error bars. In practice, those are quite large, so even if we could have earned extra returns by using the models, it may have been solely due to luck. Second, we have selected models that have performed well in the past, so there is some selection bias. And of course, past performance is no guarantee of future performance.

So just to recap, use HISORY as predictor of future returns BUT remember, past perf is NO guarantee of … oh, never mind…Here is link TO NYFed

http://libertystreeteconomics.newyorkfed.org/2013/05/are-stocks-cheap-a-review-of-the-evidence.html

And remember. The Fed has NOTHING to do with the equity RAMP here and ‘over there’. This is only a coincidence that the NYFed asking IF stocks are cheap. Right. EF Hutton must be rolling over on the floor laughing (or crying) right now

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