Hussman Says Stock Valuations Indicate the Next 10 Years One Of The Worst Decades In US History

In a recent letter to investors, investment great John Hussman estimates that the S&P 500 is priced to achieve a 10-year total return of only 5.05% annually. Using a method that values the S&P 500 using “forward operating earnings,” the projected 10-year total return of his models is just 4.69% annually, once again just around five percent. The current S&P 500 dividend yield at 1.96%, and the 10-year projection from dividend-based models suggests a return of around 2.30% annually.

Therefore, individuals who can get safe interest rate yields around 5.0% per year should take note. Presently the long-term outlook for equities is unfavorable on the basis of valuation, so Hussman argues that long-term investors are likely to be ill-served by investing in stocks at the current price levels.