This chapter explores different statistical models that help an investor to study market and analyze its trends. The Fed model is centred on the premise that the bond market is the largest alternative to the stock market. If the bonds yield more than equities, investors are better off buying bonds. It is argued that one year of watching either trading 12‐month or forward expected 12‐month earnings is not long enough to correctly capture a firm's earnings profile. Measuring 10 years of trailing earnings and comparing them to the current stock price is a better way to measure a company's earning power over a complete business cycle. This long‐term, retrospective measure is called the cyclically adjusted price/earnings (CAPE) ratio. The CAPE shows that the market can move away from its long‐term earnings value, sometimes for long stretches.