Extreme Valuations "New Normal?"

Just a quick update for the subscribers, with yesterday’s settles and MEGA8s update.

Before we get into that, let’s take a look at John Hussmans latest work is excellent and it can be viewed, Here is Link for JHussman

It should be mandatory reading for all my followers, listeners, subscribers. In his article he posts his updated Market Cap/GVA data chart posting a present day value of 3.46 extreme:

Source: Hussmanfunds.com

He goes on to say:

Now consider the coming decade. The only way to prevent the pendulum from swinging backward is for valuations to sustain a permanent extreme. In that case, we would expect average annual growth of about 4.5% from the turtle (U.S. corporate revenues), coupled with a contribution of about 1.3% from dividends. The only time the S&P 500 dividend yield was lower was in the months surrounding the 2000 bubble peak. Assuming that valuations never retreat, these assumptions would imply estimated average nominal S&P 500 total returns on the order of 5.8% annually. -John Hussman

The big question above, will valuations sustain a “permanent extreme.” Well that remains to be answered obviously, but having those two words in the same sentence, can also be construed as the “new normal!”