Equity Allocation Predicts Next Quarter's Market Return

It predicts fully one-fourth of the variation in market returns

Still slogging through Michael Howell’s Capital Wars. The going is slow because Howell makes a lot of serious claims and, as you know dear reader, I like to check things with my own hands. At one point he argues that the proportion of assets held in equities is a good measure of risk appetite so that it predicts 2-year ahead equity returns. That obvious…