VTI - VOO: 2024 Return Projection Based On Excess CAPE Yield

2024-04-17 12:55:33 ET

Summary

• The article provides a projection for the Vanguard S&P 500 ETF (VOO), estimating a downside risk of around 8% by the end of 2024.
• The projection is based on the Excess CAPE Yield (ECY).
• The ECY is currently near the lowest levels in several decades, indicating high valuation risks and low future return potential.
• Alternative ideas include VTI, which provides exposure to mid-cap and small-cap stocks with higher growth potential and more reasonable valuations.

Thesis

The goal of this article is to form a return projection for the overall equity market represented by the Vanguard S&P 500 ETF ( VOO ). The projection will be made mainly based on the ECY (excess CAPE yield). The choice of VOO is motivated by two considerations. First, thanks to the fund’s low fee, the fund tracks the underlying S&P 500 index closely (more on this in the second section). And second, most investors express their views on the overall market via an index fund rather than the index itself. Thus, as a popular fund, analysis based on VOO can be more tangible and actionable for many investors....

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