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No Expiration Date on S&P 500 Bull Run Hurtling Into Ninth Year

  • Stretched valuations no hurdle for S&P 500 rising 10% in 2016
  • Analysts see earnings growth topping 10% in next two years
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What Will the New Year Bring for U.S. Markets?

Valuation, history shows, is an awful tool for market timing. Equity cycles persist, and selling just because price-earnings ratios are high has repeatedly proven a mistake.

But what if the persistence starts pushing up against history? Consider the S&P 500 Index, which as of now has spent 42 months trading in the upper reaches of one range, the cyclically adjusted P/E ratio popularized by Robert Shiller. Only twice before has it stayed higher for longer, each time ending with crashes, in 2000 and 2007.