At the market level, stock returns only come from 4 things: dividend yield, real earnings growth, inflation, P/E expansion/contraction. Looking at 10yr+ return

At the market level, stock returns only come from 4 things: dividend yield, real earnings growth, inflation, P/E expansion/contraction. Looking at 10yr+ returns, the dividends and real earnings growth are likely to be relatively stable. The big wild card is P/E expansion/contraction. Dividend yield + real earnings growth gives us a baseline real return of around 3.6%. A 30% PE contraction over the next 10 years would bring that return down to 0% and would still leave the PE at historically high levels. A return to historical valuation levels would mean a negative return in the neighbourhood of -3% annually. Of course, it is also possible for PE to expand another 30% over the next decade causing stocks to deliver great returns. Which scenario the world follows is more due to sentiment than economic performance which is why it is not predictable. Although there is certainly a probability bias towards the downside With that said, valuation levels tell you a tremendous amount about risk levels, which are VERY high right now. Which might inform you to lower your stock exposure if you can't handle a large drop in pricing (either due to not being able to sleep at night or the effect it would have on your lifestyle).