This predictive indicator hasn’t been wrong since 1966, and it offers an ominous warning for Wall Street.
Over the last century, no asset class has performed better than stocks. While Treasury bonds, housing, and various commodities, including gold, silver, and oil, have delivered positive returns, nothing has come close to matching the annualized return stocks have brought to the table.
Thanks to the artificial intelligence (AI) revolution, stock-split euphoria, and stronger-than-expected corporate earnings, Wall Street’s bull market rally recently celebrated its two-year anniversary. The mature stock-driven Dow Jones Industrial Average (^DJI 0.09%), benchmark S&P 500 (^GSPC 0.40%), and growth-fueled Nasdaq Composite (^IXIC 0.63%) have all reached multiple record-closing highs in 2024.
But history also tells us that stocks don’t move higher in a straight line. Though no metric or indicator can concretely predict short-term…
