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Bernstein is saying that he looks at things that have not occurred in the past to make his future estimates of safety.

He does not say any such thing, markr33. He is saying that to limit yourself to "looking at the past" in the manner that intercst did produces misleading results. You have to incorporate other factors into the equation, factors like the overvaluation of stock prices.

Bernstein has no objection to looking at market behavior in the past as a means of getting a grip on the overvaluation factor. In fact, the Fisher analysis he endorses is based on the observation of ways in which the stock market has always behaved in the past. Bernstein is saying that to look at only a single aspect of what happened in the past produces misleading results, you need to consider all relevant factors to obtain a useful result.

how does he know that this information is a velid representation of what may occur if it hasn't ever occurred in the past ?

You should take a look at the "Bernstein on Valuation" post, markr33. It begins to waste the board's timesto go over the same points again and again and again. That post has been available for your review for several months now.



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