Yet valuations don’t predict stocks’ direction – and they never have. Heresy? More like history – more than a century of it – proving that today’s lofty PEs mean little.

This isn’t my 2026 forecast (that will come in late December or January), but valuations won’t sway it. Pundits tout many valuation measures for timing. In addition to PE, there’s dividend yield, price-to-book and price-to-sales ratio (the latter I created more than 40 years ago).

The 2008 financial crisis inflated trailing PE’s to a record high and created a generational buying opportunity the following year. Finaeon

The logic: Low valuations indicate “cheap” stocks – so “buy low.” Lofty ones supposedly signal froth – foretelling meager returns or worse. Better “sell high.” Hence the current fear.

Acrophobia – not facts – underpins this. It was hardwired into us when our ancient ancestors roamed the wild. Big falls can risk injury or death, so avoid heights – good survival advice. Bad investing practice.

Consider the S&P 500 and a complex but top-drawer statistic called R-squared, which shows how much one recurring phenomenon explains of another. Readings of zero mean A never causes B, while 1.00 signals A always causes B.

Since 1872, the S&P 500’s annual starting PE (using trailing 12-month earnings) and forward 1-year returns have an R-squared of 0.01—essentially no causality! R-squared using three- and five-year returns is 0.03 and 0.02. That means just 3% and 2% of US stocks’ forward three- and five-year returns, respectively, even possibly stem from PEs. Randomness. Believing the reverse is just dumbness.

Why? First, valuation metrics are widely known – hence already widely priced into stocks. Also, stock prices look forward while earnings look backward. Even projected earnings, used by many, stem from current expectations, already baked into sentiment and prices (and often wrong).

Chart shows valuations don’t predict returns with any reliability. Finaeon

This can make P/Es look nosebleed high at great buying opportunities. Recall early 2009, when stocks soared, anticipating recovery from the financial crisis. But recession-decimated earnings didn’t yet reflect it. The S&P 500’s Dec. 31, 2007 PE of 17 soared to 60 by 2009’s start. Overpriced? No…a generational buying opportunity.

Yes, bad returns can follow high PEs. At 2000’s start the S&P 500’s PE topped 30 and annualized -2.3% for the next five years. It began 2022 with a PE near 30 and slid -18.1% that year.

But high PEs preceded great returns, too. 2003 started with a 32 PE. US stocks leapt 29%, annualizing 12.8% the next five years. 2021 launched with a 38 PE. Yet stocks returned 29% that year, annualizing 10% returns over three years … despite 2022’s bear market.

PEs in the US were high for most of 2009-2025, and stocks soared 944% through last month even with two bear markets in that time. Luiz C. Ribeiro for New York Post

US PEs were high throughout most of 2009-2025. Yet stocks soared 944% through October – even with two bear markets in route.

What of the famous “Cyclically Adjusted PE (CAPE)?” It aims to mute cyclical factors by averaging a decade’s inflation-adjusted earnings. It wasn’t designed to time stocks, but many use it that way anyway.

Some cherry pick intervals where it seemingly worked – its R-squared with 10-year future returns approaches 0.30. (Though this still means CAPE can’t explain 70% of 10-year returns.) But it fizzles down to randomness levels over shorter—and longer—periods. Why tie your retirement to random-like metrics?

Valuations aren’t entirely useless. They can help pick stocks within value categories (what I created price-to-sales ratios for). But for broad market predictions? No.

Faith in valuations’ predictive powers sets you on a road to market PErdition. Be a valuation heretic.

Ken Fisher is the founder and executive chairman of Fisher Investments, a four-time New York Times bestselling author, and regular columnist in 21 countries globally.

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The answer, in Dina Powell McCormick and Sen. Dave McCormick’s case, is a very long list of people.

The couple’s new book, “Who Believed in You?” taps into their vast Rolodex — spanning politics, technology, entertainment, finance and fashion — to share how instrumental mentors have been in the lives of the people running the world today.

“We wanted people to see that, whatever your profession, someone helped you get there,” Powell told me. “Americans today can be that person for someone else.”

The book’s index is the ultimate list of name-checks. Tory Burch, David Chang, Condoleezza Rice and Brian Grazer all make appearances, as do presidents. (Powell worked for two: George W. Bush as Sr. White House Advisory, and Donald Trump as Deputy National Security Advisory.)

Dina Powell McCormick and Sen. Dave McCormick wrote “Who Believed in You” during pandemic lockdown, when they saw the impact the isolation had on their daughters. REUTERS

Lloyd Blankfein, who Powell identifies as one of her most important mentors, is even quoted — jokingly referring to himself as Powell’s “tormentor” for the challenging feedback he gave her.

The book is worth a read for the inside accounts of how the rich and powerful got where they are. (Microsoft’s Satya Nadella credits Doug Burgum for helping him become a CEO — who knew?) But it also highlights just how pivotal it is to build deep relationships, to find success and meaning.

Powell acknowledges it sounds “corny.” But she sees a real American crisis in terms of how many young people are lonely and lost — in large part because Gen Z hasn’t been challenged to get where they are supposed to go. This book is her and her husband’s effort to spark a movement of adults who will mentor and believe in the next generation.

“One of the most transformative experiences of my life has been building deep relationships with mentors and mentees,” she told me. “This could be the moment to ignite a mentoring movement where people truly believe in the power of investing in one another.”

JPMorgan Chase CEO Jamie Dimon made a cameo at Powell’s Manhattan event this week, praising her as “a better banker with more and better relationships than many big finance CEOs.” Courtesy of Dina Powell

It seemed to strike a chord with attendees at a packed event — hosted by Mary Erdoes, CEO of the asset and wealth management division at JPMorgan — celebrating the book earlier this week.

More than 300 women from firms all across Wall Street — including BDT & MSD Partners (where Powell is Vice Chairman), Citigroup, Goldman Sachs and JPMorgan — were on hand. Franklin Templeton’s Jenny Johnson, Citigroup’s Jane Fraser and Goldman Sachs’ Asahi Pompey joined Powell to candidly describe the self-doubt and tears (even in the office bathroom) it took to get to the top of their game.

It was a powerhouse crowd, with JPMorgan’s Kristin Lemkau, PR maven Desiree Gruber, Jessica Seinfeld, Wendi Murdoch, Amy Griffin, and Margaret Anadau.

Jamie Dimon also made a cameo, praising Powell as “a better banker with more and better relationships than many big finance CEOs. She’s the full package — doing it all at the highest levels, in an industry where women were historically disadvantaged, especially when she started out.”

Powell acknowledges it sounds “corny,” but she sees a real American crisis in terms of how many young people are lonely and lost. Courtesy of Dina Powell

What struck Powell most about the event, she told me, wasn’t the attendees’ focus on climbing the corporate ladder. “These women weren’t asking about their next promotion,” she said. “They were hungry for purpose — meaningful lives, not just successful careers.”

Powell herself immigrated to the US from Egypt with her family at age six, not knowing a word of English, and went on to work in the White House, become a partner at Goldman Sachs and, now, serve as vice chair at Byron Trott, Gregg Lemkau and Michael Dell’s investment firm.

This story is part of NYNext, an indispensable insider insight into the innovations, moonshots and political chess moves that matter most to NYC’s power players (and those who aspire to be).

McCormick attended West Point and served in the first Gulf War. He later became CEO of hedge fund behemoth Bridgewater Associates for more than a decade before being elected as the junior senator from Pennsylvania.

At the event, it was remarkably hopeful to hear from five different women about how they created their American dream at a time when more than three-quarters of respondents believe the next generation will be worse off than they are, according to a Pew Research Center study. More than half of Generation Z also say they are either pessimistic or feel unprepared for the future, according to a Gallup and Walton Family Foundation report.

The deep relationships with mentors and mentees that Powell helped her launch initiatives including Goldman’s 10,000 Women and 10,000 Small Businesses which provide entrepreneurs business education, mentorship and access to capital. Colleagues who launched the program with her spoke at the event along with some of their mentees.

Powell adds, “We hope people will … ask themselves three questions: Who believed in you? Have you thanked them? And who will you believe in and invest in? If we all ask ourselves those questions, we can make a huge impact in the country.”

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