Bob Kargenian Quoted in Barron’s
Bob Kargenian was quoted in a Letter to the Editor in Barron’s, a weekly newspaper that covers financial information, relevant statistics, and market developments.
Bob Kargenian said, “I would be wary about drawing black-and-white conclusions from Nicholas Colas’ comment that mean reversion should start to kick in merely because the past 20 years for stocks have been quite below average (Up & Down Wall Street, Jan. 4). There’s simply no consideration of valuation in that statement. Are profit margins at a permanently high plateau? Will there never be a contraction in price/earnings ratios?
“Many fundamentally based valuation metrics showed stocks in September 2018 at their most overvalued levels ever, with perhaps the year 2000 the only exception. Ten-year expected returns for U.S. stocks from the likes of GMO, Research Affiliates, and John Hussman all suggest barely positive or even negative compound returns. That doesn’t mean their forecasts are viable, since I’ve never seen an analysis of the accuracy of their methods, but to simply conclude that stocks will do better over the next 10 years than the past 20 without looking at where one is starting seems problematic.”