Commentary 
Asset bubbles have been prevalent throughout history. Whether it was the “Tulip bubble” in the 1600s, the South Sea bubble of the 1700s or the Dot.com bubble of 2000, they resulted from excessive investor speculation.
Of course, the other side of the inflation was the long unwinding of those bubbles as valuations mean reverted from their previous extremes. As shown below, such reversion led to long periods of low returns for investors.
(Dr. Roberts Shiller/www.RealInvestmentAdvice.com)
Another way to look at valuations and forward returns is with a scatterplot. As you will notice, real total returns over the next decade are near zero at current valuations.
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