GMO's forecasts, and really the backbone of their entire investing philosophy, is that valuations will revert to historical averages. Valuations are a non-stat

GMO's forecasts, and really the backbone of their entire investing philosophy, is that valuations will revert to historical averages. Valuations are a non-stationary process with no defined mathematical mean, so the entire concept of "mean reverting valuations" is nonsensical. Their entire investing philosophy isn't based on some deep understanding of the market but is simply an "end of history illusion" that the past (in this case the era in which the principals of GMO came of age) will continue unchanged indefinitely into the future. It isn't just they they've been wrong about US valuations and US returns. They've also been wrong about Emerging Market valuations and those returns. It can't just be handwaved away as "US investors went crazy for FANG and Tesla" because that only addresses half their failure.