I sensed a kindred spirit when I saw his link (The S&P 500 at Your Fingertips) to Prof. Shiller's S&P price database, which is actually the Cowles Commission database with the S&P extension. From 2010's "New York Guano":
Equity Valuation and Forecasting Future Returns and a Gift for our ReadersAnd from Political Calculations this morning:
A subject near and dear to my heart. I may be the only person I've ever met who read every page of The Cowles Commission's Common Stock Indexes 1871-1937.
[you must be a blast at parties -ed]
(links below)...
...That's Prof. Robert J. Shiller's Irrational Exuberance webpage. Here's his Yale homepage. When he took on Efficient Market Hypothesis back in the early '80's I decided I liked the guy. Publishing IE in March 2000 with the Nasdaq hitting 5048 (subsequent low 1114) pretty much convinced me. In addition to his professorships he's on the research staff of The Cowles Foundation for Research in Economics....
The S&P 500 Enters a Post-Transition Period
You have to admit - we were right. Last week was indeed a big week for the S&P 500!
From Monday, 13 May 2013 to Friday, 17 May 2013, the S&P 500 rose by nearly 2%, or 32.35 points, from 1630.77 to a new record high of 1666.12. Over half the gain for the week came on Friday, 17 May 2013, as the S&P 500 rocketed up by 17 points.
In doing that, the S&P 500 completed the transition it began on 1 May 2013, as investors shifted their forward-looking focus from the second quarter of 2013 to the first quarter of 2014 in setting their expectations for the sustainable portion of future earnings growth for the stock market (a.k.a. "future dividend growth".) We can observe this transition directly in our chart below as the movement of the daily and 20-day moving average of the change in the rate of growth of stock prices from the red line representing 2013-Q2 to the green line representing 2014-Q1, which correspond to the change in the year-over-year rates of growth of the trailing year dividends per share expected for each of these quarters.
Now, even though this confuses the more dim-witted among Seeking Alpha's commenters, this latest transition of investor forward-looking focus from 2013-Q2 to 2014-Q4 follows very similar transitions that have taken place periodically since the end of the Federal Reserve's QE 2.0 program at the end of June 2011. Following the deflation of that mini-bubble in the weeks that followed, stock prices have since been very fundamentally-driven with little noisy exception, with the pace of acceleration of stock prices matching up with the changes in the growth rates of trailing year dividends per share for discrete future quarters....MORE
