Valuation ratios and the long run stock market outlook

Question: How can aggregate stock market valuation ratios - the dividend-price ratio and earnings-price ratio - fail to predict future stock price movements, movements in the denominator, given that these ratios themselves are mean-reverting? Answer: If these ratios predict the growth rates of dividends or earnings, movements in the numerator. Given their analysis of long aggregate historical stock market data ti-om the United States and eleven other countries, the authors conclude that these ratios do not forecast dividends or earnings, certainly not consistently in the right direction. The analysis suggests a gloomy next four or ten years for the United States and some other stock markets.