This chapter reviews the prior studies that examine the relationships between predictor variables and equity returns. As such it sets the context for candidate predictor variables used to forecast equity market performance later in the book. The remainder of the chapter is laid out as follows：Section 4.1 simply describes the standard dividend discount model. Section 4.2 attempts to relate potential variables to equity returns without questioning the assumption of model stability whereas Section 4.3 accounts for the impact of model instability. Section 4.4 summarises and concludes.