Would you invest in the FTSE now?

For investors holding cash the timing of when to dip into the markets can have a material effect on long term returns. Whilst metrics such as P/E ratio and dividend yield provide indication of relative value, without time series they miss the effect of sentiment driven trends and the long run business cycle. 

One way of capturing these effects is to look at the average long term compound growth rate, on the basis that the rate of economic wealth creation (which should be reflected in long term stock prices) obeys some constant function, and that there is an inevitable reversion to the mean. The attached chart shows the last 30 yrs of the FTSE250 (nominal, dividends not reinvested) with an exponential trend line.  This suggests that the correction throughout 2015 was very much needed but that today's price is still around 6% above the long term average trend of a CAGR of 8.5% (Dec 1985 to Dec 2015).  The market hasn't dipped below the long run trend since 2012 as the market clawed its way back from the depth of the 2009 recession. The question is would you invest in the index at this time?