Message Font: Serif | Sans-Serif
No. of Recommendations: 2
Today, off a solid 25% rebound from that low, the S&P 500 is at 985 with the dividend yield now at 2.0%, plus a still-expected (hoped-for?) 6% earnings growth, the investment return on stocks during the coming decade would be 8%. The P/E has risen to about 19 times on projected operating earnings (I know that's a stretch) and it's hard to see much upside. If we assume it eases the 18 times ten years from now, speculative return would take away about one-half a point from the investment return. Result: Reasonable expectations suggest to me an annual return on stocks of about 7½%—say, 6% to 9%—in the decade that lies ahead. (You don't agree? Just to insert your own expectations for earnings growth and P/E change, and then extend the simple math.)

Bogle is suggesting lower future stock returns (and Bernstein and Buffett) although it doesn't mean that it is going to happen that way I am not comfortable assuming that it won't

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.