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iM-Best Reports – 4/7/2025
Posted in pmp SPY-SH
Stocks Are Still Overvalued Despite Recent Significant Declines, Expect Further Losses, But Modest 10-Year Forward Returns: Update April 2025
- The average of S&P 500 for March 2025 was 5,680, declining to 5,074 by April 4, 2025 (now 13% up from Jul-2023 average of 4,497 when forward returns for stocks “looked reasonably good” according to this analysis).
- The S&P 500 is still 1,140 points higher than the corresponding long-term trend value of 3,934 for April 2025.
- For the S&P 500 to reach the corresponding long-trend value would entail a 22% decline from the April 4, 2025 value, indicating that the S&P 500 is still considerably overvalued.
- Assuming that the current S&P 500 value remains unchanged until the end of April, then the CAPE-ratio would be 31.0, 15% higher than its 35-year moving average (MA35), currently at 26.9.
- The long-term trend indicates a forward 10-year annualized real return of 4.0%, while the CAPE-MA35 methodology derived 10-year annualized real return is better at about 6.7%.
Stocks Are Overvalued Expect Only Modest 10-Year Forward Returns: Update March 2025
- The average of S&P 500 for Mar-2025 was 5,680, (26% up from Jul-2023 average of 4,497 when forward returns for stocks “looked reasonably good” according to this analysis).
- The S&P 500 is now 1,760 points higher than the corresponding long-term trend value of 3,920.
- For the S&P 500 to reach the corresponding long-trend value would entail a 31% decline from the March average value, indicating that the S&P 500 is considerably overvalued.
- The Shiller CAPE-ratio is at 34.9, 30% higher than its 35-year moving average (MA35), currently at 26.9, forecasting a 10-year annualized real return of about 5.5% derived from the CAPE-MA35 methodology.
- The long-term trend indicates a forward 10-year annualized real return of only 2.7%
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