This post is a detailed follow-up to this previous short post: The Price-Earnings Multiple tells you almost nothing about next years returns. The questions and comments I got were along the lines of “but it works on longer timeframes”, “you’re doing it wrong by only considering 26 data points” and so on. So here’s a much more detailed (no bite-sized simplistic takeaways – the word count should warn you!) exploration of the relationship between Index P/E and Forward Returns, how plain regression struggles in ...