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Probable Outcomes Hardcover – January 14, 2011
The Amazon Book Review
Author interviews, book reviews, editors picks, and more. Read it now
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Source: John Mauldin, President, Millennium Wave Investments; Author of The Endgame and Bull’s Eye Investing
Probable Outcomes makes a strong case that the stock market over the coming decade at best will deliver only average returns to buy-and-hold investors. Once again, as in his splendid earlier book, Unexpected Returns, Ed Easterling tells investors not what they would like to hear, but instead what they need to know.
Source: Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, Stern School of Business; coauthor of A History of Interest Rates
Easterling has done it again. In an investing world obsessed with short-termism, Ed reminds us that the long-term matters, and that investors can prosper – handsomely – by recognizing that valuation and long-term secular trends have an immense impact on our own long-term investment success. Swimming against the current is for heroes and idiots, not for sensible mortals.
Source: Rob Arnott, Chairman & Founder, Research Affiliates, LLC; Former Editor, Financial Analysts Journal
Every captain needs a good navigator. Now investors can have Ed’s market insights helping them navigate the market’s tricky waters. In Probable Outcomes, Ed sets different courses depending on your view of inflation, the economy, and market valuations, helping you select the best investments for your course. For stock pickers wanting to understand the market environment, Probable Outcomes should never be far from reach.
Source: David Meier, Senior Analyst and Writer, The Motley Fool
As a practitioner and a teacher of finance and economics, I am captivated with Easterling's insights and quantification of the important and critical role of price stability in producing superior investment returns.
Source: Harvey Rosenblum, Executive Vice President and Director of Research, Federal Reserve Bank of Dallas; Adjunct Professor of Finance, Southern Methodist University
From the Inside Flap
When will the stock market again deliver better returns?
Probable Outcomes continues the Crestmont Research tradition of extensive full-color charts and graphs that enable investors and advisors to differentiate between irrational hope and a rational view of the stock market. This book's empowering insights prepare you to take action during the current period of below-average returns. The unique combination of investment science and investment art explores the market from several perspectives and addresses the significant implications for a broad range of investors. Beyond concepts, Ed Easterling delivers a dramatic analysis of the likely course for the stock market over the 2010 decade. Investors and advisors will benefit from this timely outlook and its message of reasonable expectations and value-added investing. This essential resource offers a compelling understanding of the key fundamental principles that drive the stock market. Derived from years of meticulous research, Probable Outcomes provides sensible conclusions that will guide your future investment choices and allow you to invest with confidence, whatever your financial strategy.
Top Customer Reviews
However, because Mr. Easterling provides all his research for free online, perhaps the money spent on this book can be seen as a contribution back to him for his great services to investors.
The book begins by reviewing and elaborating on how to understand and identify what drives secular stock market cycles. Students of secular market cycles or those who follow Easterling's work Unexpected Returns: Understanding Secular Stock Market Cycleswill recognize the key theme of these chapters: those who invest hoping to achieve the long-term "average" returns for the stock market will feel lucky (or smart) during secular bull markets that typically produce mid-teens average annual returns and frustrated (or give up trying) during secular bear markets that typically produce zero or negative real returns.
In the first few sections, the author reviews the characteristics of these secular markets, describing what economic conditions drive changes in P/E multiples and thus eventual returns to the stock market over time. A discussion about various states of potential economic growth and inflation could have been improved with a more global perspective on what will drive future changes to the U.S. economy. Easterling spends considerable time discussing the difference between the widely used Cyclically Adjusted P/E produced and popularized by Robert Shiller ([...])Irrational Exuberance and his own version which aims to improve on the widely used (but often ignored) measure.Read more ›
The first part of the book is a lesson in market finance and economics from a practitioner view and not the usual financial academic approach - again quite informative and refreshing. Every concept is supported by data and colorful charts, which make learning and understanding the process enjoyable. He spends a great deal of time and effort to ensure that his explanations are easily understood and succinct.
Secular markets are driven by long-term trends in Price Earnings ratios (PE), which, in turn, are driven by inflation/deflation. This removes the scale of time from the secular cycle definition and only uses the trends and cycles of PE and inflation as the identification of secular bear, and bear market cycle beginnings and endings. Simply, a secular bear begins when valuations peak and reverse because of a trend back toward low inflation, then continue to decline throughout the secular period. Once sufficiently low, usually single digit PE, a new secular bull period can begin.
The book wraps up with a thorough evaluation of how the current decade (2010-2019) could possibly play out (currently in a secular bear), using a large number of different EPS, PE, and Inflation combination scenarios.Read more ›
Most Recent Customer Reviews
Good merchandise, on time delivery. Definitely would buy again.Published 9 months ago by David W Reische
One of the best books on the subject. Check out Unexpected Returns too, it is from the same author.Published 21 months ago by Tomaz Korosec
An interesting discussion of p/e ratios and how they have changed through time, and where they are likely to go in the future. Read morePublished on May 27, 2013 by N. ROBERTS
The book makes a compelling argument about the existence of secular stock market cycles and how P/E ratios tend to predict market returns in subsequent periods. Read morePublished on August 8, 2012 by David J Allison
This is a wonderful book.
A concern with the present level of stock values is they are supported by a level of corporate earnings as a percentage of GDP which is the... Read more
Every Financial Advisor who has an Ibbotson chart in his/her office should read this ... as well as institutional consultants. Read morePublished on November 9, 2011 by Jeff Cummer
If you are serious about investing in the stock market I urge you to read this book! I have read nearly every significant book regarding the stock market and I have professionally... Read morePublished on August 4, 2011 by BFC