I know I'm just talking with myself whenever I share these graphs, but for my own amusement, here is an update of the forecast I shared about four years ago:
The "smooth trajectory" is a best fit of SP500 from 1950 to March 2018, and represents my first crude, naive estimate of "the mean" that the index wants to revert to (or rather to fluctuate about). Here is a plot, with index values (y-axis) on a logarithmic scale so that my best fit (smooth trajectory) plots as a straight line, and you can see the index fluctuate over time above and below:
Since I made this forecast in March 2018 (which racket mocked for being so broad as to be meaningless, which is fair criticism from a certain perspective), the index has fluctuated within my 10th percentile to 90th percentile bounds, kissing those thresholds three times (twice at 10, once at 90).
If I were a betting man, which I'm not, I'd wager there's still a lot of room to fall.
While I'm not a "betting man," per se, I have been making investing decisions over the past 3-4 years with this graph in the back of my head, moving hard to cash about a year ago when things were starting to feel a bit too hot according to the "idiot index."
I personally think there's some downward momentum that needs to run out, and I'll be keeping my powder dry (or shorting something if an obvious candidate appears) until SP500 is at least under 3500, and then maybe start to ease back in.
My partner has spending habits to fund past retirement, I can't light the whole nest egg on fire! :-)
My $0.02