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Market Outlook

Today's Market

Summary

The S&P 500 has rebounded to near-record highs, defying warnings from 10-year rolling return and P/E regression charts.

Reliance on 10-year rolling return correlations is flawed due to non-independent, overlapping data points that undermine statistical validity.

Regression to the mean is misapplied to equity returns, as secular forces like declining tax rates and technological progress drive long-term profitability upward.

Using 10-year rolling correlations for investment decisions can be especially problematic given the current combination of equity prices and equity profit growth potential.

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