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No. of Recommendations: 2
I don't have any thoughts on this new calculator, but it sounds like Bennett and Russell have put in lots of time into the research behind this calculator, so it will be interesting to see if they are right. Again, I don't really care what the S&P 500 is doing, all I really care about is how my individual holdings perform in the long run.

I think you are right about picking good stocks. :)

I played with the calculator just a little. It seems to be based predominantly on P/E and the idea that stocks in the S&P are overvalued. Move the P/E slider to about 6 and watch your possible returns grow!

As you say, it's an interesting tool. It's based on past data, which is all we have to work with, but y'know, we all read everywhere that "past performance does not guarantee future results" or something to that effect. I'm not disagreeing with the calculator - I think it could have some validity. We use past data and some guesses all the time to try to find the best companies.

I don't know anything about efficient market theory (which also, paradoxically to me at least, seems to be named the random-walk theory.) According to Morningstar, the efficient market theory "says that future stock prices don't depend on past prices--prices are arrived at by chance." If I understand it correctly, the authors of the calculator are saying that P/E ratios can be used to predict future stock changes (based upon historical numbers). This ability to predict contradicts efficient market theory, according to the abstract of the paper linked to in the calculator page. I have to admit this is making my head hurt as I try to decide if picking individual winners goes against or for the theory.

In spite of my aching head, I still think, like you, that well-picked above-average companies can beat the average returns of the S&P. Well, at least that's what I'm counting on. ;)

Best, spicy

oh, morningstar link (which is a reading list); mentions efficient market theory only briefly:
Might have to read A Random Walk Down Wall Street.
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