Value Line Return Expectations and Future Stock Market Returns

Are there any experts who can reliably predict stock market returns? In their September 2025 paper entitled “Beliefs and Stock Market Fluctuations: New Evidence from the Past Seven Decades”, David Thesmar and Emil Verner assemble and test a 69-year sample of expected stock earnings and returns from Value Line (about 1,500 firms per year). They first compute the expected return for each stock by combining long-term (three to five years) Value Line earnings expectations and price targets. They then aggregate these expectations to annual market-weighted time series. They then compare the predictive power of the Value Line series to those of survey-based expectations of finance professionals, professional forecasters and individuals from prior research. Using the specified Value Line inputs during 1956 through 2024 and expectations from various surveys, they find that:

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