$BTC (+0,15 %) | $CSPX (-0,23 %) | $CSNDX (-0,2 %) I'm looking forward to your opinions and feedback, thank you🫶

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New research uncovers the math behind stock returns and advises investors to prepare for shocks

Javier Estrada's latest study„Expected Stock Returns in Bullish Times" sheds light on the mathematical factors that influence stock returns - and explains why the current market exuberance should be viewed with caution.

By analyzing more than 150 years of US market data (1872-2024), Estrada has broken down annual returns into their main components: Dividend yield, earnings growth and changes in the price-to-earnings ratio. His findings show why the conditions for sustained above-average earnings rarely persist for long, especially after strong bull markets.

Lessons from bull markets throughout history

Estrada's analysis of the US market shows that periods of rapid earnings growth are rarely accompanied by a simultaneous expansion of price-to-earnings ratios. In fact, these two factors have exhibited a negative correlation over decades (correlation coefficient of -0.5) - meaning that investors do not simultaneously drive up valuations during periods of rapid earnings growth and vice versa. This relationship becomes particularly critical when markets reach extreme valuations, as was the case both in the late 1990s and in the current situation.

His analysis shows that the current market situation - high price-to-earnings ratios, low dividend yields and optimism driven by recent returns - bears some similarities to the situation in 1999. Back then, the S&P 500 posted impressive gains, but valuations reached unsustainable levels. When the reversion to the mean finally began, returns over the following decade were disappointingly low (just 0.1% annualized before inflation

Why high returns are harder to sustain

Estrada's modeling shows that the expectation of high future returns in exuberant markets requires at least one of two conditions: extremely rapid earnings growth or a sharp widening of price-to-earnings ratios, or both. History shows that these conditions are rarely met simultaneously - expecting them now is increasingly unrealistic.

When fundamentals such as earnings and dividends return to their long-term averages, future returns will fall.

Estrada estimates that if fundamentals normalize, annualized returns of around 0.4% could be achieved over the next ten years.

Key findings for investors:

Valuation before extrapolation

What is the actionable advice for retail investors?

Estrada's work calls for a readjustment of expectations:

• Please be prepared for lower stock market returns over the next ten years, especially if reversion to the mean occurs.
• Avoid recency bias - the urge to believe that a recent strong performance will continue indefinitely.
• Prioritize fundamental valuations (dividend yield, earnings growth rate, price-to-earnings ratios) over tracking performance.
• Consider a more conservative allocation to equities and diversify your exposure to other risk assets such as private credit, infrastructure, real estate and market neutral long-short strategies, such as those used by AQR Style Premia Alternative QSPRX for example.

Estrada's analysis of equity returns over a 150-year period conveys a clear message: the higher markets go, the less likely it is that all factors affecting returns will remain positive. The negative correlation between earnings growth and P/E expansion means that both factors rarely increase returns simultaneously over long periods of time.

Today's market environment of expensive stocks and low yields presents a major challenge to sustaining recent gains. A perfect (and historically rare) combination of rising earnings and multiplying valuations would be required to justify optimistic forecasts.

Rather than speculating about the right time, Estrada recommends paying close attention to valuations and preparing portfolios for lower returns. Reversion to the mean - the tendency of markets to revert to historical averages - is one of the most enduring features of the stock market. Investors who heed these lessons will be far better positioned to weather the eventual turn in the cycle

For investors, the message is clear: base your expectations on historical data, not hopes. Strong bull markets will eventually be replaced by periods of moderate or even negative returns - and preparing for this change is a sign of discipline.

Own assessment:

Admittedly, this is not an entirely new insight for informed and aware investors. In view of the current market conditions, however, I wanted to share the summary of the study with you in order to provide new market participants in particular with an analytical and long-term (150-year) orientation.

The author(s) do not own shares in the securities mentioned in this article. Find out more here Redaktions-Richtlinien von Morningstar.

Larry Swedroe is a freelance writer. The opinions expressed here are the author's. Morningstar values diversity of thought and publishes a broad range of viewpoints.

Source

https://global.morningstar.com/de/maerkte/anleger-aufgepasst-bullenmrkte-dauern-nicht-ewig?utm_source=eloqua&utm_medium=email&utm_campaign=Germany_Weekly&utm_content=None_69633&utm_id=36229

Hello my dears,

a short UPDATE.

In a correction, my growth portfolio often underperforms the comparable market.

This was also the case in November.

Perhaps I am not yet conservative enough here, especially when it comes to a bear market.

What do you think?

Because I have usually performed better than the comparable market in strong months.

I am still better than the market YTD.

The tops and flops are attached.

With the tops you can see that Pharma has run.

The reason at Googel should be known.

At Albemarle, the rise in lithium prices

With the flops

were the earnings at elf Beauty,

the AI correction at Innodata,

at AeroVironment a correction of the defense values (peace negotiations)

the capital increase at Kitron,

November performance

Tenbagger - 4.58 %

Core S & P 500 ETF $CSPX (-0,23 %) - 0,47 %

NASDAQ 100 ETF $CSNDX (-0,2 %) - 2,27 %

World ETF $IWDA (-0,52 %) - 0,36 %

YTD Performance

Tenbagger + 11.17 %

S & P 500 ETF $CSPX (-0,23 %) + 3,49 %

NASDAQ 100 ETF $CSNDX (-0,2 %) + 6,79 %

World ETF $IWDA (-0,52 %) + 5,87 %

Greetings,

I generally don't think much of posts on feeds from any media, as they don't bring me any added value but merely serve to present myself. Now that I have followed the publications and reactions a bit, I think I have seen more than less constructive members here.

For this reason, I have decided to make the first post of my life here. It's not directly about sums, I just want to ask for your assessment of my savings plan and target allocation. Constructive criticism and suggestions for improvement are expressly welcome.

The whole thing is intended to reflect a core-satellite strategy with a 1:1 risk/reward ratio.

Global diversification (core) - 60%:

• $CSPX (-0,23 %) - 25%,
• $MEUD (-0,45 %) - 17%,
• $LEM (-0,34 %) - 10%,
• 
  $XDWH (-1,19 %) - 8%,

Individual securities (satellites) - max. 20%:

• 
  $BRK.B (-1,06 %) - 5%,
• 
  $IBE (-0,96 %) - 3%,
• 
  $CRWD (-0,52 %) - 3%,
• 
  $HUBS (+1,51 %) - 3%,
• 
  $AVAV (-7,29 %) - 2%,
• 
  $NTLA (-6,63 %) - 2%,
• 
  $BWXT (-2,4 %) - 2%,

Buffer (security) - approx. 20%:

Raw materials:

• 
  $IGLN (+0,11 %) - 6%,,
• 
  $CMOE (+0,82 %) - 4%,

Bonds:

• 
  $0GGH (-0,12 %) - 6%,

Real estate:

• 
  $IWDP (-1,22 %) - 4%.

My thought process should be clear. The core should cover global performance with a percentage distribution based on economic strength. Separately, the World Health Care ETF, as people are getting older and sicker and, in my opinion, the healthcare sector is not so strongly represented in the other ETFs.

For the satellites, my thought process is as follows:

Berkshire can be seen as an ETF and covers successful individual stocks.

Nothing works without energy, hence BWX (USA) and Iberdrola (Europe). I see digital security threatened by AI and the further development of data centers etc., hence CrowdStrike. Companies will always need good software to be able to expand and still keep track of things, hence HubSpot. In connection with AI and the armed conflicts in our world, I see drones as a future-oriented technology in all possible areas, hence AeroVironment. And I discovered Intellia as a medical catapult, which is admittedly a bit of a gamble, but always gets a lot of drugs into the test phase.

I don't think I need to say much about the buffers, as in my view these are the investments that remain stable or grow in difficult market phases when everything else is falling.

This gives you a little insight into my thinking and actions. Please don't tear it apart, I'm not a professional but I'm sacrificing some of my remaining free time to get a bit of an insight into the world of capital and maybe get a small slice.

I welcome any opinions and suggestions for improvement.

I wish everyone a successful week!

Best regards

Nils

I think the attack is getting closer and closer and today was a good chance to buy.

https://www.reuters.com/graphics/USA-CARIBBEAN/MILITARY-BUILDUP/egpbbnzyrpq/

$CACI (-0,8 %)
$VIXL (-2,36 %)
$CSPX (-0,23 %)

Good morning everyone,

In the past, the community has clearly demonstrated that together we are an absolute added value for 🤑🤑🤑.

That's why I'm asking for your help :-) I am looking for mid-/long-term growth stocks to complement my core around $IWDA (-0,52 %)
$CSPX (-0,23 %)
$MEUD (-0,45 %)
$EIMI (-0,6 %)
$QDV5 (-0,92 %) to complement it.

Currently set are $NVDA (+1,75 %)
$GOOGL (-1,46 %)
$IBM (-0,66 %)
$SOFI (-2,07 %)
$IREN (-4,64 %)
$LMND (-3,93 %)
$RKLB (-4,4 %)
$BTC (+0,15 %) - DCA

What ideas do you have?

LG

Have a wonderful Sunday everyone!

🔔 BREAKING: The biggest de-escalation in the US-China trade conflict in years is imminent.

Under the new agreement between Donald Trump-USA and China, the following measures apply:

🇨🇳 China's measures:

1.Suspension of new export controls on rare earths

2. issuance of general export licenses for rare earths

3. "Significant measures" to curb fentanyl trade to the USA

4. suspension of all retaliatory tariffs imposed since March 4

5. suspension of all non-tariff countermeasures since March 4

6. purchase of at least 12 million tons of US soybeans

🇺🇸 Measures taken by the USA:

1.Reduction of tariffs on Chinese goods by 10 percentage points

2. extension of certain exemptions under Section 301 until November 2026

In addition:

-China will suspend all retaliatory tariffs announced since March 4 and repeal or suspend all non-tariff countermeasures imposed since then.

-China has also committed to easing export restrictions on certain automotive chips - a clear signal of a possible "thaw" in technology trade relations.

-Analysts are talking about the biggest de-escalation in the trade dispute between the US and China for years - a move that has received far too little attention so far.

Are we in for a Moonvember let us know in the comments!

$CSPX (-0,23 %) , $EQQQ (-0,16 %) , $BTC (+0,15 %)

$CSPX (-0,23 %)
$IWDA (-0,52 %)
$EIMI (-0,6 %)
$CSNDX (-0,2 %)
$VUSA (-0,42 %)
$VHYL (-0,53 %)
$SPYI (-0,46 %)
$HMWO (-0,52 %)

https://www.whitehouse.gov/fact-sheets/2025/11/fact-sheet-president-donald-j-trump-strikes-deal-on-economic-and-trade-relations-with-china/

President Trump announced an economic and trade agreement between the USA and China:

- China suspends all retaliatory tariffs and non-tariff measures imposed since March 4

- China issues new general licenses for the export of rare earths and suspends new export controls.

- China pledges to stop the flow of fentanyl to the US

- China will buy at least 12 million tons of US soybeans

- The USA reduces tariffs on Chinese goods by 10 percentage points

The biggest de-escalation in relations between the US and China since the start of the trade war.

China 🇨🇳 will suspend all retaliatory tariffs and non-tariff measures in place since March 4, lift export controls on rare earths, issue global licenses for rare earths and critical minerals such as gallium and graphite, and commit to buying 12 million tons of US soybeans this year and 25 million tons annually through 2028. China will also take "significant measures" to stop fentanyl shipments to the US.

In return, the U.S. 🇺🇸 will reduce tariffs on Chinese imports imposed to curb fentanyl trade by 10 percentage points of the cumulative tariff rate, effective November 10, 2025, extend Section 301 tariff exemptions through November 2026, and suspend new export control measures for one year.

📈 The $SPY (-0,68 %) or auc $CSPX (-0,23 %) has risen for 6 months in a row. What happens statistically after that?

Historical data since 1957 show:

➡️ +9.6 % on average one year later

➡️ 81 % of cases positive

➡️ Only rare correction phases

The markets are running - but for how much longer?

We analyze exactly such cycles live every day at Grey Capital - with data, timing & setups before they become mainstream.

Join Grey Capital and learn how to read market cycles before they tip🤓