THE STOCK MARKET

摘要

Over the past five years the S&P Index of 500 stocks has earned 18% a year. Subtract inflation and you get 16%. Is that a good forecast for future returns? Not at all. Over the past century the real annual return on stocks has averaged 6.6%. That's a more realistic guess for future results. But it still looks a little too bullish. A significant contribution to that nice return has been the fact that stock prices have gone from a fairly low multiple of corporate earnings in 1914 to a fairly high multiple now. It takes a lot of optimism to assume that the expansion of multiples will continue.