NY Fed Models Forecasting Excess Returns Through 2018
The NY Federal Reserve has an equity research department. Their research department determined in 2013 that "stocks are cheap" and that investors should enjoy "excess high returns" in an abnormally low or negative real interest rate environment for the next five years through 2018. Before reviewing potential mean reversions, implications from the Year of the Horse, & George Lindsays bearish Three Peaks and Domed House model, lets attempt to quantify the NY Fed models. How high the Dow Jones might climb if it is to enjoy "excess high returns" through 2018.