No. of Recommendations: 6
Looks like it's the 'Stairway To Heaven' model.
Has a few landings to catch your breath & never a retrenchment!
Even better. It doesn't even have flat spots! Those apparent plateaus are actually rising at inflation + 1.5% since the last time the "high value to date" changed. The notion is that during bear markets, the true value of a share is still rising, you're just not seeing it in the data yet.
The reason for the low rate (1.5%/year) is that it is conservative, and also empirically makes price prediction work the best at the one year horizon. A floor rate of inflation + 4% makes for a smoother graph and is probably closer to true economic reality, but price doesn't catch that "as-yet-unseen" value till a few years after a bear. Other than the fact that it's a smoother graph, I don't have a justification for using the more aggressive 4% number other than that it feels good, so I stick with the 1.5% which has more practical use for me.
Jim
