Thread by @MebFaber

As we come close to wrapping a bow on stock returns this decade, some perspective.

Average real returns (after inflation) per decade were 6.6% per year.

Worst was -3.4% (2000s)
Best was 16.7% (1950s)

We're currently ending the top 5 best decades...is that predictive at all?

If you look at the three worst decades (1970s, 1910s, 2000s, average -2.6%), future returns were 12.3%...Nice!

If you look at the three best decades (1920s, 1950s, 1990s, average 15.8%), future returns were 1.1%...Yuck!

We're ending the decade at 5th highest out of 11, where one would likely expect lower returns in the 2020s (but still positive).

BUT......

It should be of no surprise, that after the three worst decades, valuations were subdued, averaging a 10 PE of only 11.7, setting the stage for a big multiple expansion tailwind...

But after the three best decades, valuations were 28.3, setting the stage for big headwinds...

Today we have the 5th best performing out of 11 decades, so sort of in the upper middle.

BUT

We have the 2nd highest valuation, at CAPE ratio of 30, out of 11 decades too.

Summary? Celebrate the hell out of this great 10 year run....but sober up soon, take your medicine, and consider a decade in the future with lower US stock returns.

(You all already know how much more positive I am on foreign, especially emerging markets for the next decade)

Will check back in 2029 to see how this tweetstorm turned out!