There are many popular and obscure valuation ratios and models (e.g. P/E, CAPE, Fed) that investors, analysts and strategists employ when forecasting the stock market.

And according to a recent report from Vanguard's Joseph David, Roger Aliaga-Diaz, and Charles Thomas, they're all pretty terrible.

The three tested a bunch of popular metrics against stock returns since 1926 to test whether they explained actual returns (as measured by R2). Here's summary of their conclusions:

"First, stock returns are essentially unpredictable at short horizons. As evident in the R 2 s, the estimated historical correlations of most metrics with the 1-year-ahead return were close to zero"

s, the estimated historical correlations of most metrics with the 1-year-ahead return were close to zero" "Second, many commonly cited signals have had very weak and erratic correlations with realized future returns even at long investment horizons. Poor predictors of the 10-year return included trailing values for dividend yields and economic growth, corporate profit margins, and past stock returns."

"Our third primary finding is that valuation indicators—P/E ratios, in particular—have shown some modest historical ability to forecast long- run returns."

In other words, if you have to use one of these measures, use them for long-term investing. And use them as a guide, not gospel.

Here's a chart from the report: