Gold Will Outperform Stocks, Bonds, And Real Estate
By Bulls and Bears:When allocating capital to asset classes, investors must analyze the underlying fundamentals before determining which investment provides the best outlook for their investment dollar. The following analysis will describe the outlook over the next 3-5 years for each of the major asset classes: 1. Stocks, 2. Bonds, 3. Real Estate, and 4. Gold.
Raw Data Source: http://www.econ.yale.edu/~shiller/data.htmLooking at Robert Shiller's cyclically adjusted P/E ratio, it highlights the fact that the stock market is overvalued on an adjusted P/E basis, with a current adjusted P/E ratio of 21.9 vs. a long-term average of approximately 16x earnings.
Note: Corporate Profits as a Percentage of GDP
Source: GMO's James Montier: "What Goes Up"
Corporate profits are mean reverting and above the historic average of 6%. Over the next 3-5 years higher input prices will add significant pressure on margins. Compounding the problem is the fact that analystsComplete Story »